Welcome to The Current Account! We hope you enjoy our latest round-up of the top news from the industry in May.
Headlines from the banking sector this month
In this edition of The Current Account, we focus on how banks are tackling financial inclusion, and the financial risks organisations face because of climate change.
Tackling Financial Inclusion
- The Cost of Living Crisis has pushed financial inclusion high up on the agenda for those who provide financial services; the regulators that monitor them; and the customers they serve. This broadens concerns around financial inclusion to include not just whether people have access to necessary financial services, but also the income available to households.
- We can already see responses in the market to this broader concern. A London-based fintech lender, Creditspring, has raised a total of £70 million to support their mission to help people across the UK build their financial stability. This funding will be used to support more members to avoid high-cost, unscrupulous lenders and manage their finances through the cost of living crisis.
- The war in Ukraine has also driven action around financial inclusion in the more traditional sense, with the likes of NatWest, RBS, Lloyds and others helping Ukrainian refugees physically access banking services. HSBC also provide this service, coming on the back of their successful partnership with Shelter, to provide bank accounts for homeless people.
- However, there are still huge delays in issuing biometric permits to refugees which means many are struggling to find the proof of identity needed to open a bank account. Also, the evidence banks accept differs, where some allow alternatives but many won’t.
- Regulators are demanding more from financial services providers. The European Banking Authority are asking banks to lessen anti-money-laundering rules for Ukrainian refugees to allow for easier access to services, and we expect UK regulators to quickly follow suit. Also the FCA's research programme on the fair treatment of vulnerable customers, and upcoming Consumer Duty regulations, will also help drive financial inclusion in the UK. These regulations will ask banks, building societies and the like to now evidence, more than ever before, that access to their services is fair; the information and advice they provide to customers across different contexts is easy to understand; and customers aren't being pressed towards inappropriate products, services or additional charges.