Responsible finance providers have a long and proven track record – the next Government must invest in them

Posted On: 
22nd November 2019

Responsible Finance, the voice of the responsible finance industry, sets out their Manifesto for the 2019 General Election. 

The responsible finance industry has a significant impact on its customers and communities.
Credit: 
PA Images

The responsible finance industry works to promote prosperity and address inequality by empowering people to take control of their financial futures.

Access to finance and financial exclusion are significant barriers to growth and long-term prosperity in local economies across the UK, at the individual, household, and business levels. Access to finance is access to opportunity, and consumers and businesses who struggle to borrow from mainstream lenders often struggle to climb out of disadvantage.

Responsible finance providers have a long and proven track record in providing access to credit to people and businesses that cannot access finance from mainstream providers, driving inclusive growth across the UK.

Over the past 10 years, responsible finance providers have lent almost £2 billion to 410,000 businesses, social enterprises, and individuals. This has helped start-up new businesses, created and saved jobs, enabled social enterprises to deliver community services, provided an affordable alternative for families who use high-cost credit, and supported cash-poor homeowners to stay in their homes.

Responsible finance providers directly contribute towards achieving the United Nations Sustainable Development Goals.

The responsible finance industry has a significant impact on its customers and communities. This is made possible by our model: local market knowledge and reach, putting the customer first and providing support alongside finance to open access to opportunity.

Over the last few years we have seen significant changes in the ‘alternative’ financial services market. The consolidation of high cost personal lending market and explosion of providers in the high cost business lending market, which remains unregulated, highlights the need for greater supply of responsible finance.

Responsible Finance’s 2019 Manifesto

Government must ensure there is long term and sustainable funding for business lenders, social enterprise lenders and personal lenders.

Sustainable funding will ensure the sector has the capacity and capital to expand its reach and impact.

A strong and capitalised responsible finance industry will build wealth, help move people out of poverty and reduce inequality of opportunity. We welcome the creation of Fair4All Finance, and will work with them to help scale the personal lending sector.

The next Government should update Community Investment Tax Relief to ensure it remains fit for purpose. Tax reliefs and guarantee schemes are tools widely utilised by the responsible finance industry to leverage commercial investment, thus increasing our impact. These tools need to be kept competitive to maximise social and economic return.

Community Investment Tax Relief (CITR) has proved effective at attracting investment into enterprise lending Community Development Finance Institutions.

Personal lending by responsible finance providers does not currently qualify for access to CITR tax relief as the 2002 legislation targeted only qualifying enterprises. We propose extending the tax relief for use by the personal lending sector.

It is also vital that EU facilities which incentivise commercial investment into the responsible finance sector, namely EaSI, COSME and ERDF, are replaced in full by the UK's Shared Prosperity Fund.

 

Read more about Responsible Finance HERE.