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Fair By Design is delighted to be working with Fair4All Finance and Toynbee Hall on a pilot No Interest Loan Scheme (NILS), the first of its scale across the UK, with £3.8m in funding from HM Treasury.

Up to £1m of lending capital will also be provided from each devolved administration, matched in England by Fair4All Finance. The loans will provide a vital financial cushion for people unable to access or afford existing forms of credit, but who can afford to repay small sums, by offering a way to spread essential or emergency costs.

The scheme will kick off with proof of concept loans in Autumn 2021, followed by a wider two year pilot in up to six areas of higher deprivation starting in Autumn 2022.

In partnership with Fair4All Finance and Toynbee Hall, Fair By Design will design and deliver the pilot in collaboration with HM Treasury and the governments in Northern Ireland, Scotland and Wales. We will work with credit unions, Community Development Finance Institutions (CDFIs) and other regulated lenders, who will be able to apply to administer the loans through a formal procurement process starting in November.

Local councils, housing associations and charities will be encouraged to form partnerships with lenders and provide co-funding to help increase the amount of people the pilot can reach. These partnerships are key to the success of the scheme.

The NILS pilot aims to test the benefits to customers, society and the economy and show whether a permanent nationwide NILS can be delivered in a sustainable way.

John Glen, Economic Secretary to the Treasury said:

“Backed by a £3.8m boost at Budget 2021, our No-Interest Loans Scheme pilot is making good progress and it’s excellent to have Fair4All Finance on board. I now want to see lenders and organisations committed to financial inclusion supporting this innovative new scheme, which could make a vital difference for people right across the UK who can’t access or afford existing forms of credit.”

Carl Packman, Head of Corporate Engagement, Fair By Design said:

“A poverty premium exists for many low income individuals accessing credit today. This means we often see lending firms charging large sums for small loans and borrowers ending up paying several times the amount they’ve borrowed, just for the same sort of finance that many better off households take for granted.

“That’s why we’re very excited to be working on the rollout of the No Interest Loan Scheme pilot. It’s very important we test and learn what kind of products and services are needed to truly help low income citizens meet their financial commitments and ambitions.”

More information, including on market engagement webinars can be found here.