‘Overlooked and financially under-served’ – launching our new report with PwC
By Alastair Douglas, CEOApr 27th 2022
Today marks the launch of our new report with PwC – ‘Overlooked and Financially under-served: Sizing the financially under-served population in the UK’. Under-served means those with limited financial reserves, who struggle to access mainstream credit, and it’s a group we at TotallyMoney work to help every day. We knew, based on the growth of our customer base over the last few years, that this population was bigger than anyone expected. It’s a group which we believe industry players and regulators need to pay more attention to – especially in the current economic cycle, and never more so than now.
The findings show that it is too big a problem to ignore any longer: 20.2 million people now fall into this category, an increase of 50% in just six years when it was 13.6 million. To add to that, an additional 8.9 million adults are exhibiting signs of financial fragility, and at risk of falling into this category.
Clearly in the last few years, Covid and now the worst cost of living crisis in a generation have stretched people’s finances to the limit. But we can’t use that as an excuse.
The reality is, the credit market is archaic. Data is jealously protected by credit reference agencies and not held by the people it actually belongs to. This could be as simple as a one-off late payment years ago that left a blot on a credit record, and has a significant ripple-effect. People therefore don’t have access to the information they need to understand what’s holding them back. To add to that, the system then either shuts them out, leaving them with little other option but to turn to high-cost, short-term borrowing. Or, when they do borrow, it’s at an extra cost with a higher APR. It’s a vicious cycle.
In essence, the credit market is not fit for a modern economy in which spending habits have changed and, quite rightly, regulation has brought about the demise of payday loans which exploited the most vulnerable in our society. Mainstream providers have clearly found it challenging to serve the under-served. However, no apparent progress has been made since the publication of the Woolard Review, which highlighted the need for greater involvement of mainstream lenders in the non-prime credit markets.
Our mission at TotallyMoney is to help everyone move their finances forward, and we offer the UK’s only free, live credit report and score. Using a data-led approach, we help our customers understand, track and improve their credit score with tailored solutions and personalised recommendations. We work with many market-leading lenders who genuinely care about matching customers with the right products. But there is lots more work to do, and we need all hands on deck to change things for the better. We don’t think a credit market that works for customers, and a credit market that works for lenders need to be mutually exclusive. I would encourage all those interested in helping us change things for the better to get in touch.
To download the report, click here.