Stephen Pearson is chair of Financial Inclusion for Scotland

HAVING worked in retail banking for around 20 years, the issue of providing access to fair finance has never been far from my field of view. During my time at RBS Group in the Noughties, we were involved, along with the rest of the industry, in the major test case about the fairness of banking charges. This was a challenge to all UK banks about the way they charged customers for banking services such as exceeding the terms of their overdrafts.

Part of the problem with the regime of bank charges was – and is – that well-organised people who enjoyed “free banking” and avoided charges were subsidised by the less well-organised who were often less well-off. Add to that the poverty premium – whereby people with less money generally pay more for utilities and other household essentials – many customers with low incomes struggled to access fair banking. That increasingly troubled me.

Fast forward to the summer of 2022, and many households across Scotland are struggling to deal with the dual impacts of the Covid-19 pandemic and the ongoing cost of living crisis. According to recent research by the Money and Pensions Service, the pandemic has widened pre-existing gaps for low-income households when it comes to everyday borrowing and keeping up with bills. There is also emerging evidence to suggest that more people are using unlicensed money lenders or loan sharks than pre-pandemic.

In short, the people who are suffering most may find themselves excluded from accessing fair or affordable solutions from the traditional financial services sector.

This is why financial inclusion must be a top priority in an inclusive society such as Scotland. That necessity has led a group of Scotland’s leading policy makers and professionals from across the private, charity and not-for-profit sectors to come together and create a new organisation to tackle financial exclusion.

Financial Inclusion for Scotland was launched today with the aim of enabling better financial inclusion in Scotland by supporting those who find it difficult to access fair or affordable financial services, such as free banking, affordable credit and money management services. Managed by Social Investment Scotland (SIS), Financial Inclusion for Scotland is formed of 10 founding members from across the commercial and non-for-profit sectors with a shared commitment to find new ways to expand financial inclusion in Scotland.

By working with Scottish Government, third sector agencies, the fintech community and financial services groups, we hope to find new ways to provide those who need it most with access to affordable credit, stigma-free debt advice and smartphone money management tools. We also hope to stimulate fresh investment into this sector through new partnerships and more coherent policies, while developing practical and innovative solutions that can have a real impact on the ground.

Our work has just begun but I’m convinced we can make a significant difference as a collective. With household budgets coming under increasing pressure this winter, due to record high inflation and rising energy costs (even accounting for the price cap freeze), providing equitable access to fair finance has never been more needed.