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This report provides an assessment of the social benefits that have been created by Fair for You: a Community Interest Company providing affordable credit to families with incomes in the lower half of the income distribution throughout the UK.
We need urgent action to address Britain’s household debt crisis. Even before the Covid‑19 pandemic 7.2 million people (fourteen percent of the population) were heavily burdened by debt.
In October 2019, we were commissioned by The Commonwealth to review international approaches to deal with rising household debt. This led to a discussion paper which we presented to Commonwealth Central Bankers at the IMF/World Bank event in Washington DC.
The pandemic's impacts have been extremely unequal. And there are implications for the way we should assess credit risk. In a briefing paper for the University of Birmingham's Centre on Household Assets and Savings Management ('CHASM'), we call for credit scoring systems to incorporate social justice considerations.
In 2012 we undertook a study tour to Japan and investigated the impact of their measures to cap the cost of credit and prevent irresponsible lending. Our report highlights the positive effects of these measures, and drew out the implications for the UK.
In 2016 we were jointly commissioned by UNISON and the TUC to undertake an analysis of over-indebtedness in Britain. The report highlighted how traditional measures of the debt burden understated this because they fail to take account of rising living costs. We construct a new measure based not on gross incomes but on the level of interest payments relative to the available surplus of income over non debt related expenditure. We call for this measure to be used to guide future policy interventions.
In 2008, as the financial crisis hit, our Executive Director, Damon Gibbons, teamed up with Ian McCartney MP to write a briefing focused on the need to protect low income borrowers. The report coined the term 'credit dependency', to describe the relationship with high cost legal lenders, and called for caps on the cost of credit, greater focus on affordable lending, and action to tackle illegal lenders.
The Financial Conduct Authority is in the final stages of consulting on its proposals for a new Consumer Duty, which focuses on ensuring improved outcomes for users of financial services and products. In this briefing we consider how the proposed duty could help to address long-standing problems associated with ‘relending’ in the UK’s consumer credit markets.
The Covid-19 pandemic posed a considerable risk to the community finance sector. To assist, Fair4All Finance's Covid-19 Resilience Fund provided £3.9 million of support to 31 community finance providers. Read our independent evaluation here.
CfRC and Debt Justice joint response to HM Treasury's proposals for the Statutory Debt Repayment Plan ('SDRP') calls for major revisions, including the incorporation of a mechanism to write down debts sold to debt collection agencies and for public scrutiny of the Standard Financial Statement 'trigger figures' used to determine how much debtors will need to pay back through the plans.
With the cost-of-living crisis deepening, we undertook an independent evaluation of Fair for You's Food Club and Shopping Card trials with Iceland Foods. The products provided households with small sum credit at low interest rates to households. The evaluation revealed that the trials improved financial well-being and diets, and we recommend that the products be rolled out at scale.
Over the past two years there has been increasing concern about levels of illegal lending. But estimates of its scale vary widely. This study involved secondary analysis of the FCA's Financial Lives Survey for 2020. The findings highlight that recent small-scale surveys indicating a significant rise in illegal lending are likely to be unreliable, and that over-indebtedness and previous, legal, high-cost credit use are dangerous drivers that need to be addressed.
With increasing numbers of council on the brink of declaring effective bankruptcy and increased Council Tax arrears, there is an urgent need to reform local government finance. In this briefing we set out our position and call for improvements in funding for councils, debt advice commissioning, and the Council Tax collection regime.