Plend‘s ‘Financial Inclusion Report notes that the impact of a cost of living credit crunch’ is far-reaching. The update touches on the effects of “the cost of living crisis, personal and household finances, and the resulting impacts on access to financial services in the UK.”
The findings emphasize “how badly some groups – such as young people and ethnic minorities – have been affected more by the crisis than by the pandemic, thereby contributing to the increase in financial exclusion of those looking for support.”
Research conducted by Opinium from over 4,500 respondents shows “that 44% of people are struggling to ‘make ends meet’ due to the cost of living crisis, all while affordable credit is becoming increasingly harder to obtain.”
This report shared by Plend demonstrates “that the cost of living crisis is exacerbating pre-existing issues and inequalities, and large sections of the UK population are repeatedly being let down and pushed into further difficulties.”
The number of people who feel they are “being locked out of the financial system is increasing year-on-year – up from 1-in-5 (20%) of those surveyed last year, to more than 1-in-4 (28%) this year.”
The report released by Plend shows that “those who do have access to credit are finding it difficult to pay off debt or balances, with nearly 3-in-4 (72%) people having struggled at some point to pay off their loans, up from 1-in-2 (50%) in last year’s report, suggesting that financial stability among British consumers is worsening.”
Without intervention, there is strong evidence “to suggest that the use of unregulated and illegal forms of lending may start to surge as people seek other routes to access credit and keep up with the cost of living.”
This year’s report, shared by Plend, also finds “that there is a lack of trust between the public and financial institutions, with only 1-in-5 (21%) credit-holding adults believing that loan and credit card companies are charging fair rates.”
Nearly 2-in-5 respondents (39%) agreed “that if they could access a genuinely low-interest loan, their financial situation would improve; up from 27% last year.”
A collective effort from both industry and the regulator is required “to ensure a more equitable and accessible financial landscape for the UK population.”
An industry commitment to greater transparency “around interest rates will be an important step in creating a fairer lending environment.” Similarly, the adoption of blind credit applications will promote fairer lending decisions, and “provide greater access to affordable loans for those with the means to repay one.”
Robert Pasco, CEO and Co-founder Plend, comments:
“These findings highlight the mass inequality gaps in our society, exacerbated by the pandemic and the current cost of living crisis. Those who are already struggling to make ends meet are hit the hardest, with many being forced to turn to high-cost credit to meet their basic needs. This only perpetuates a cycle of debt and financial exclusion, trapping people in a vicious cycle they can’t escape from, contributing to the ‘Great Credit Divide. We must work together to prioritise financial inclusion and create a society where everyone has access to affordable credit, financial stability, and the opportunity to build a better future for themselves and their families.”
This report was created in collaboration “with Nationwide Building Society, StepChange, PFRC Bristol University, Green Finance Institute, Ascension and Fair By Design.”
For more details, check here.
