Lord (Archy) Kirkwood writes… the challenge of financial inclusion

It is a stark fact that while we are a global leader in financial services, financial exclusion is still rife: some two million adults in the UK don’t have a bank account and an estimated two million people took out a high-cost loan in 2012 as they were unable to access any other form of credit. Nine million have no access to mainstream credit, either because they are unbanked or are not able to access credit facilities through their bank. Meanwhile, the level of unsecured consumer credit has tripled in the past 20 years, reaching a staggering £160.4 billion in 2014 while only 41% of households have savings that could tide them over a period of crisis in their finances.

Much work has been done previously in identifying the nature and causes of financial exclusion, notably by the Treasury Financial Inclusion Taskforce led by Sir Brian Pomeroy, that was wound up in 2011. But there is still much to be done, and the last couple of years, since the taskforce was finished, have emphasised the need for a coordinated approach to try and provide tangible solutions to the problem. The advance of technology and coming of Universal Credit have brought new challenges.

The Financial Inclusion Commission, of which I am a Commissioner, is a cross party group drawn from senior parliamentarians (Labour, Conservative and Liberal Democrat), together with a range of experts in the field. It was set up in October to investigate the problem and to provide practical recommendations on what can be done. It aims to push this serious issue as far up the political agenda as possible before the 2015 general election and come up with some tangible methods of dealing with it. We will be taking evidence around the country over the coming months, with our first sessions taking place in Westminster this week, before producing a report in early 2015. The Commission is chaired by the former Ambassador, Sir Sherard Cowper-Coles, and Sir Brian Pomeroy has agreed to act as Commission President. If you would like to contribute or find out more information on our work, the Commission’s website gives more detail and about how to have your say.

* Lord Kirkwood was Liberal Democrat MP for Roxburgh and Berwickshire between 1983 - 2005 before entering the House of Lords as Lord Kirkwood of Kirkhope.

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  • Eddie Sammon 3rd Dec '14 - 5:07pm

    Work should be done on this, but I’m worried about the state’s increasing involvement in financial services. People will say “good”, but I don’t care, if I’m not comfortable I just won’t vote Lib Dem.

    Thanks for the article.

  • Tsar Nicolas 3rd Dec '14 - 7:56pm

    The Lib Dems voted in Parliament to reduce the level at which a creditor can apply for a charging order and such an order can be granted by the courts from £25,000 to just £1000. This change took effect in January 2013.

    This means that any unsecured loan which is over £1000 can be transformed into a charge on your property, thus putting a person’s house at risk.

    I wonder if anybody can explain to me how this furthers ‘financial inclusion.’

  • “The Lib Dems voted in Parliament to reduce the level at which a creditor can apply for a charging order and such an order can be granted by the courts from £25,000 to just £1000. This change took effect in January 2013.”

    Source for this?

  • James Sandbach 4th Dec '14 - 12:53am

    @ Hywell Look at page 12 of the Coalition Agreement – I personally lobbied with both tories and libdems for an orders for sale protection threshold of £25k to be put in the Coalition Agreement as a priority alongside bailiff reform in order to help people in Debt! What happened, first the Govt legislated to increase creditors powers to impose orders for sale, and then reneging on the Coalition agreement they legislated for a protection threshold of only £1000 (why – basically because this was what creditors lobbies told them to do!). It was a direct, clear, unambigious, and frankly appalling breach of the Coalition Agreement (no surprise there though)! Tsar N not correct tho’ that they voted it down from £25k as it wasn’t there before! See here for http://www.publications.parliament.uk/pa/cm201213/cmgeneral/deleg1/130110/130110s01.htm
    As for bailiffs the Govt. have actually increased their powers in subtle ways.

    I complained to Archy K. above about both issues at the time & Archy was really helpful in supporting moves to get proper regulation of bailiffs on the statute book (tho’ this initiative too failed!) Scrapping legal aid for debt cases hasn’t helped the financial inclusion agenda either!

    However, I wish the Financial Inclusion Commission all the best with its work – Consumer Debt is a huge issue and as toxic for the economy as Government Debt; it still hasn’t been solved though thankfully some interventions have been moved by FCA against the worst practices of pay day loan markets. Fuel and utilities debt in particular is going up.

  • Tsar Nicolas 4th Dec '14 - 2:39am

    @James Sandbach

    I am grateful for your post and accept that my previous post was at least in part incorrect.

    My ire at this issue arose from helping somebody earlier this year, somebody whom I would have regarded as a constituent during my councillor days which ceased more than half a decade ago.

    He owed a debt to a high street bank/building society. Less than £2000. He had lost his job and his partner had incurred the debt on a credit card. the matter went straight from a default notice to an application for a charging order. I think it was during one of many phone calls that this £25,000 figure came up – I knew that there had previously been protections against going straight to this drastic stage. It turns out that there had been.

    Previously, a creditor had to get a County Court Judgement against the debtor, and if a payment schedule had been agreed upon, the creditor could not apply for a charging order unless this agreement had been breached.


    Now the CCJ stage has been missed out altogether, and arguably putting the £1000 limit in has made things worse, since a payday loan for, say, £600, will soon approach the £1000 limit with default, interest and penalty charges.

    Really, the present situation makes the whole distinction between unsecured and secured loans a bit of a joke, and a rather sick one at that.

    I am not sure whether your information about the £25,000 limit being included in the Coalition Agreement, and then ditched, makes this whole thing rather worse from a Lib Dem point of view. It clearly demonstrates that there was awareness of this issue and its implications, but we went with the Tories and the banks anyway.

  • Tsar Nicolas 4th Dec '14 - 2:50am

    Further clarification.

    The CCJ stage is still there but the application for a charging order can be made at the application for a CCJ stage – no chance to get in an agreed payment schedule. My previous post reads as is if there is no need for a creditor to get a CCJ.

  • Paul Reynolds 5th Dec '14 - 9:09am

    I welcome this article. Is this a case of not seeing the wood for the trees ? Has anyone tried to open a bank account lately ? Banks now routinely only allow new accounts following an interview and often appointments are not easily available. They ask for proof of address which is difficult for many people…since for example to get your name on a utility bill you need….a bank account. Recently for a friend with such a problem the bank suggested in order to solve the problem that she provide….a bank statement. Speaking personally, it took me 9 months and hours and hours of hassling to open a small business bank account this year. Are parliamentary committees normally so detached from the everyday lives of plain folk ?

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