Response to Katrina shows the power of partnerships in achieving financial inclusion
We will hopefully never face the type of devastation Louisiana suffered, but we can learn the lessons of how it engendered longstanding cooperation to address issues of financial inclusion to ensure everyone in Britain can access the financial support they need, says Guy Opperman MP.
This Government is committed to building an economy where everyone, no matter what their background or income, can have the affordable financial services they need.
Financial inclusion means people participating fully in the economy, empowered to achieve their goals in life. It means improving people’s access to banking, affordable credit, insurance, savings and payments systems, making full use of financial technology as well as offering protection in adversity.
Improving access to affordable credit remains a key challenge and we can learn from people’s experiences in other countries too.
I was fortunate recently to meet a senior member of the Hope Credit Union, which did vital and transformative work in the wake of Hurricane Katrina in Louisiana, during a discussion organised by Lloyds Banking Group on the importance of credit unions.
What I heard underlined the importance of credit unions and the impact they can have in improving levels of financial inclusion. After Katrina many residents left homeless and often with little more than the clothes on their backs received up to $50,000 as part of the disaster relief effort. Nothing could compensate for the loss and pain inflicted by the hurricane, but the payments provided invaluable support to those most in need.
Many of the hurricane’s victims had never had that amount of money in their possession before, and needed support and advice as to how to save or invest effectively in order to rebuild their lives. I was struck by the accounts of how Hope had been able to meet the needs of people in both big cities and isolated rural communities. They did this not by following a ‘one size fits all approach,’ but by talking to civic groups, churches, schools, local authorities and businesses about what their needs are. This has allowed them to provide the right products and services for those communities, increasing financial inclusion.
Credit unions are a force for good here in Britain too, helping to ensure people can access banking services and have alternatives to short-term, high-interest lending. But while credit unions already make a vital contribution to our financial services sector, we can learn a lot from the example of Hope as to how to build on the foundations we have through community engagement and local partnerships.
This Government is committed to supporting the growing number of credit unions and work by the likes of Lloyds Banking Group to mentor unions’ staff and signpost members of the public to their services, when appropriate, are valuable and welcome.
But there is much more to do if credit unions in this country are to fully realise their potential – and that work must extend beyond government as we learn the lessons of Hope Credit Union in the USA and deliver sustainable local coordination.
Our major business and banking sectors must continue to put their shoulders to the wheel to assist credit unions in their growth and to signpost people in need of their services.
We will hopefully never face the type of devastation Louisiana suffered but we can learn the lessons of how it engendered longstanding cooperation to address issues of financial inclusion. Applying these to Britain can ensure everyone can access the financial support they need.
Alongside our work on financial inclusion, the Government is taking significant steps to improve people’s financial capability and will work with the new Money and Pensions Service to develop a long-term national strategy to improve people’s understanding of money, pensions and their ability to manage debt.
Guy Opperman is Conservative MP for Hexham and the Minister for Pensions and Financial Inclusion
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