The UK government has been urged to continue to prioritise financial inclusion after the launch of a public consultation on what social and environmental causes should benefit from more than £700million of dormant assets funding in England.
Dormant assets are financial assets, such as bank accounts, that have been untouched for a long period.
The Dormant Assets Scheme, led by the financial services industry and backed by the government, aims to reunite people with these financial assets. More recently the Scheme has been widened to also include the insurance and pensions, investment and wealth management, and securities sectors.
Where a reunion is not possible, the Scheme unlocks this money for social and environmental initiatives across the UK. So far, the Scheme has released £892million, including £44illion million allocated in England this year, across three causes – youth, financial inclusion and social investment.
But the government believes that ‘now is the right time to review whether these remain the right causes for where funding from dormant assets can be allocated’.
Nigel Huddleston, Minister for Sport, Tourism, Heritage and Civil Society, said: “This consultation will allow everyone’s voice to be heard so that the Scheme can make a difference where it matters. With the cost of living crisis, it is more important than ever that we hear views from communities up and down the country on what causes we should support. I encourage everyone to participate in this unique opportunity to have your say on the future of dormant assets funding in England.”
Fair4All Finance, a not for profit organisation founded in 2019 to increase the financial resilience and wellbeing of people in vulnerable circumstances, warns dormant assets funding must continue to prioritise supporting people in financially vulnerable circumstances.
There are more than 14 million people in the UK with low financial resilience, who are poorly served or unfairly excluded from consumer credit markets, warns Fair4All Finance. That’s more than a quarter of all adults in the UK. This number rose by 3.5 million people during the Covid-19 crisis.
“Financial exclusion is an economic, health and social emergency,” says Sacha Romanovitch OBE, CEO of Fair4All Finance. “Some 14 million people – often families in the most deprived communities in the UK – are unable to access fair and affordable financial products and services to help them manage life’s ups and downs. With the first tranche of dormant assets funding and through collaboration with others, we have started to make significant impact to improve people’s lives– this work must continue.
“Long term change requires long term funding that is additional to government spending. We welcome the recognition of this in the consultation and the Government’s wish to continue focusing dormant assets funding on driving systems wide change.
“Extra funding would enable us to continue making progress on significantly increasing access to affordable credit and piloting and scaling new financially inclusive solutions such as consolidation loans, fair and affordable insurance, and solutions to address appliance poverty.”
Martin Coppack, director at Fair ByDesign, a company dedicated to ending the poverty premium, also comments: “We’ve seen the positive impact dormant assets funding can have on people in financially vulnerable circumstances through our work with Fair4All Finance piloting a No Interest Loan Scheme.
“As the cost-of-living squeeze continues, financial exclusion is an ongoing and growing problem. Too many people are still having to pay a poverty premium when accessing financial services. It’s vital that further long term funding is directed towards financial inclusion to ensure everyone has access to the essential products and services they need at a price they can afford.”
The government consultation is now open for responses and will close on Sunday 9 October.