“Most people who are in debt, something has happened that they never thought would happen – people are vulnerable, sick or escaping domestic violence. The interest is the most detrimental thing. High interest cards are heavily marketed, especially to young people – and you can be paying it back the rest of your life.” Olive
The quote above comes from one of the participants in Fair By Design and The Poverty Alliance’s Give Me Some Credit: The Reality of Life Without a Safety Net project. The project involved 14 people taking photos and writing stories that depict the day-to-day personal impacts of being denied access to credit.
It’s not the only quote like this. As you flick through the online gallery (which you can view on our website here), one thing becomes clear: There are so many reasons someone might need to access credit, and often, it’s out of their hands.
The experiences and stories in this project clearly show more needs to be done to improve the provision of affordable credit. What needs to happen to help people like Olive?
Credit and the poverty premium
Fair4All Finance estimates the value of unmet demand for affordable credit today to be around £2bn. This represents the gap between what people would like to borrow but can’t because financial institutions aren’t prepared to lend. The Money and Pensions Service estimates that one in five UK adults declined for credit in a year (between 2022-2023).
When the credit market is not working, people have two choices: go without—even if that means worsening their financial situation, or borrow regardless of the cost. Over 3 million people in Great Britain have borrowed from an illegal moneylender in the last three years.
Give me some credit: the reality of living without access to affordable credit
At Fair By Design we want to make sure that policymakers and regulators understand the lived experiences of the people behind the statistics. We partnered with the Poverty Alliance to show the harsh realities faced by people on low incomes who were denied access to credit during times of urgent need.
One of our core values is ensuring that people with lived experience are front and centre of our work. As well as raising awareness, a key objective of the project has been to empower those directly affected by financial exclusion to have their voice heard.
Campaigns for change
At Fair By Design, we strongly believe that people on low incomes must have more options. We were a founding partner of the recent No Interest Loan Scheme (NILS) pilot, which ran from November 2022 to August last year. As its name suggests, the pilot tested the impact of lending small sums to people who would not qualify for a commercial loan, all without charging interest. The pilot was run by seven lenders across Great Britain, with over £7.9m lent across 14,000 loans. A full evaluation will take place in 2026, with the aim of rolling the scheme out more widely if successful.
We are also part of a coalition calling for a Fair Banking Act, this would be modelled on the Community Reinvestment Act in the United States, which ensures that banks serve all sectors of the community as part of their social licence to operate. Under the Fair Banking Act, banks would be required to disclose their performance on financial exclusion and receive a rating.
If a rating were too low, banks could improve it by increasing lending to underserved communities or partnering with credit unions and community development finance institutions. Such partnerships would enable these specialised organisations to expand their services and support.
This could lead to an increase in the capacity of purpose-driven finance institutions to lend to individuals by up to £2.16 billion – equivalent to the amount owed to illegal money lenders across the UK
Conclusions
There is understandably nervousness about whether credit is the right solution for people on low incomes. Let’s be clear, credit is not a solution to not having enough income. No one should be forced to borrow to afford essentials like basic appliances, food and energy, as this only fuels a vicious cycle of debt.
However, affordable credit remains an important tool for building financial resilience. Most of us experience “bumps in the road” such as a temporary loss of income or an unexpected expense. For people with no or low savings affordable credit can be a lifeline, helping people to get back on their feet. High cost credit and/or an illegal loan on the other hand can start a vicious debt cycle.
As we move forward with this project, we plan to host further events to showcase the exhibition, especially in places where project participants can speak truth to power.
As the current Government works on strategies on financial inclusion and child poverty, we will also try to use this project to feed into those policy discussions.
We have created these photos for everyone working on affordable credit to use as part of their campaigning efforts. If you are interested in using the photos, please do get in contact with Frankie, f.galvin@barrowcadbury.org.uk.
