Our most recent research into the lived experience of those who have borrowed from illegal moneylenders found that social housing tenants were significantly more likely to be at risk of using illegal moneylenders than any other housing tenure.
17.5 million people in the UK find themselves in financially vulnerable circumstances, and our segmentation research found that a significant proportion, 28%, are social housing tenants. This presents a risk for social landlords, but also highlights just how important it is for them to improve tenant resilience and wellbeing in the ongoing cost of living crisis. At Fair4All Finance, our segmentation model helps financial services providers and other organisations better understand the behaviours of those who need support and how best to support them.
We understand that financial vulnerability is different for everybody, so tackling this and supporting people will require a range of interventions.
In the response to the cost of living crisis we increased our support of initiatives to install benefit and grant calculators within customer journeys to help make sure people are getting their full entitlement and we have spoken to several landlords who have done the same to maximise household incomes.
But we also know that providing access to small sums of credit, from responsible and affordable lenders, can be transformative to people in financially vulnerable circumstances. It smooths incomes, helps manage budgets, and increases overall wellbeing for those who get them. Having access to safe and affordable credit also reduces the harms of borrowing from illegal moneylenders.
The credit vacuum left by the departure of high cost, yet regulated credit providers and the continuing cost of living crisis, means we need to direct people to better alternatives.
Community finance providers, credit unions and Community Development Finance Institutions (CDFIs) are just that. Like housing associations, they are embedded in their local communities and have a long track record of offering a lifeline to people in need, and providing fair and affordable credit alongside wider support services that help people build their financial wellbeing.
Since we were founded in 2019 we have been working to expand the provision of affordable credit through investments to help the community finance sector scale, raising awareness and piloting new products that will meet the needs of customers. Registered social landlords are a crucial route in making sure that we all reach the right people at the right time.
The Financial Conduct Authority (FCA) supports partnerships between community finance and housing associations, offering specific exemptions that allow referrals to alternatives to high cost credit. We see this as an incredible opportunity so that people in financially vulnerable circumstances can access affordable and responsible credit. We also know that awareness and implementation of this exemption is low. We have some ideas about what can be done to make partnering easier, but would love to hear from the sector too.
Our CEO, Sacha Romanovitch OBE, will be speaking about the impact of the ongoing cost of living crisis and how we are investing, piloting, and innovating to meet some of the need at day two of the NHF's National Housing Summit this year.
To find out more about our work with the social housing sector and how you can support tenants financial wellbeing, or find out more about our session at Summit please get in touch.