Jane Hutt MS, Cabinet Secretary for Social Justice, Trefnydd and Chief Whip
Financial services are not working for everyone. Increasing numbers of people are excluded from mainstream finance, due to costs and or circumstance, and are instead turning to unaffordable options, leading to unmanageable debt.
There is an urgent need for creative solutions. I want to see a financially inclusive Wales with accessible financial services which meet people’s needs.
This requires change - a joined up financial ecosystem that supports referrals to appropriate products. I am clear we must do things differently if we are to see a fairer financial system work for everyone.
Welsh Government is leading on two urgent priorities to improve financial inclusion in Wales.
The first is improving access to affordable credit to low-income households.
Michael Sheen's recent documentary “Secret Million Pound Giveaway” shone a light on the crippling unmanageable debt many people find themselves in, and the need for more affordable credit options.
In March I invested a further £1.3 million into the loan expansion scheme established in 2022 to boost credit union lending. This is helping people on that financial cliff edge whose lives can be turned around by interventions like this. The £2.9 million invested to date is having real impact across Wales, increasing the capacity of credit unions to lend to those who would be declined credit otherwise. To date this has enabled over 4000 people access affordable credit. This continues to grow.
Credit isn’t the right solution for everyone, but affordable credit is vital and must be available to low-income households when needed. We all need to be alert to what happens when someone seeking credit is declined an ethical option.
As the world changes around us – the closure of bank branches, the economic climate and the acceleration of digital - it reinforces the need for innovation and initiatives to keep face to face services alive in communities, such as mobile banking. In early April I will be attending the launch of Celtic Credit Union’s mobile branch service which will take credit union services to communities right across Neath Port Talbot and Swansea.
The second priority is to support collaboration and meaningful partnerships between fin tech companies and high street banks and institutions such as credit unions and CDFI’s. Partnerships which provide clear pathways to financial organisations better placed to help customers declined credit, so they are not declined twice.
To draw immediate attention to this, Welsh Government held a second “Banking In Welsh Communities” event on 31st March which considered how to better support financially excluded people.
The Responsible Lenders Network, that I chair twice a year, brings together all parts of the financial services and advice landscape to find tailored solutions for Wales.
Finally, I am encouraged by the UK Government’s priorities for financial inclusion, with the newly established Access to Credit Sub-Committee meeting for the first time in February to develop ideas for improving access to credit. With representatives from a range of financial institutions, including Cardiff & Vale Credit Union and consumer groups, the Sub-Committee is one of three set up as part of the Government’s Financial Inclusion Committee. The Welsh Government will continue to seek to work closely with the UK Government to maximise our collective impact on this important issue.