Government commitment to supporting the responsible finance industry would help individuals climb out of disadvantage
Responsible finance providers play an essential role in ensuring people can access useful and affordable financial services, says Jennifer Tankard, Chief Executive of Responsible Finance.
Access to affordable and appropriate credit makes a critical difference to thousands of people’s lives.
Access to finance and financial exclusion continue to be significant barriers to growth and long-term prosperity in local economies across the UK, at the individual, household, and business levels. Responsible finance providers play an essential role in ensuring people can access useful and affordable financial services. Access to finance is access to opportunity, and consumers who struggle to borrow from mainstream lenders will also struggle to climb out of disadvantage.
Responsible finance providers play a critical role in supporting local economies across the UK by providing affordable credit to businesses, social enterprises and individuals. In 2018 the industry continued to grow and our members lent £85 million to 5,314 businesses, creating and saving 10,377 jobs.
In addition, our members created and saved 4,059 jobs by lending £138 million to 475 social enterprises.
23,233 of the 45,903 individuals that took out £26 million in loans from responsible finance personal lenders had previously borrowed from a high cost lender.
In the last year, Responsible Finance providers lent £5 million to 429 homeowners, bringing homes up to a decent standard and enabling 219 customers to stay in their own homes.
These facts and figures are impressive but what is harder to quantify is the impact on lives of business ambitions achieved, jobs created and saved, social challenges tackled, the building of financial resilience and people able to stay in their own, safer, homes.
Uniquely in the financial services sector, all members of Responsible Finance must agree to demonstrate accountability and transparency to stakeholders and target communities. Many of our members produce their own excellent impact reports. This annual report sets out the impact of the industry as a whole and, for the first time, links this impact to the United Nations Sustainable Development Goals.
Despite the industry’s impressive growth and impact, its ambitions for growth are hampered by the lack of available capital for investment. While responsible finance as a sector has experienced a significant increase in investment in 2018, the sources of that funding have shifted with social investors providing considerably more investment and the Government and UK banks providing less. Given the transformative impact our members make within some of the UK's poorest communities, further investment from a range of different sources is essential.
The report clearly demonstrates the positive impact the sector has on communities across the UK. In light of this, the Government must commit to helping it to scale and support even more individuals and businesses in 2019. We are calling for the creation of a dedicated responsible finance fund to unlock private sector investment to the sector, a proportion of the dormant accounts fund to be allocated to personal lending responsible finance providers, the replacement of EU funding and instruments, and the launch of a guarantee or tax-relief for the personal lending sector. We are also calling for greater transparency and regulation in the business lending sector to put an end to exploitative and irresponsible business lending practices.
Access to affordable and appropriate credit makes a critical difference thousands of people’s lives. This report gives more evidence of the real and unique impact of the responsible finance industry across the UK.
You can read the full report here.