Select Committee on Treasury Written Evidence


Memorandum submitted by APACS

  APACS welcomes the decision of the Select Committee to hold an inquiry into financial inclusion. This is an area of vital importance both to those currently experiencing barriers in accessing mainstream financial services and to consumers as a whole.

  The banking sector offers its customers a competitive and high-value service with a wide range of products, and for many customers no charges, while they remain in credit. However, banks recognise that they have a wider responsibility than just offering financial products and have embarked on a series of individual activities to address financial inclusion issues for their customers and they engage at many levels with the local communities in which they serve. They have, and will continue to, work closely with government and voluntary organisations to carry on improving financial inclusion and financial capability, with the British Bankers' Association taking the lead in its role as the banking trade association.

  I also enclose a recently published document produced in partnership with the BBA describing a range of initiatives by the industry on financial inclusion and capability.[27]

  APACS would be very happy to assist the committee further with this inquiry should you wish us to do so.

ACCESS TO BANKING SERVICES

  APACS recognises the need for consumers to have access to an extensive network of cash machines to facilitate cash withdrawal for all irrespective of income or location. In addition APACS supports Link's implementation of clear and effective guidelines to promote transparency of charging for cash machines. APACS recognises nevertheless that charging remains a marginal component in the market overall, with 96% of cash withdrawn during 2004 being from cash machines for which no charge was made.

  It acknowledges that the great majority of cash machines for which charges are levied are in "convenience locations" such as bars, shops and other retail outlets such as petrol stations. Most charging cash machines therefore are in locations that would not support a free bank-owned machine.

ACCESS TO AFFORDABLE CREDIT

  The banking industry is in support of Credit Unions, Community Development Finance Institutions (CDFIs) and a reformed social fund to allow all client groups the ability to access affordable credit. Banks are actively supporting these initiatives through key activities such as working in partnership with community and housing organisations, financially supporting credit unions and developing not-for-profit community based finance initiatives.

  Although in support of the social fund, we do recognise the need for it to be reformed. In future it could be used to support people in low paid work as well as those on benefits. Officials at the Department for Work and Pensions acknowledge that it has been run in a very bureaucratic way, and we support their efforts to make it a more user friendly and accessible source of affordable credit.

FINANCIAL EDUCATION AND ACCESS TO FINANCIAL ADVICE

  Banks believe that the process of financial "education" should start as early as possible, but until we see this included by the Department for Education and Skills as part of the national curriculum it would be unlikely for the pilot schemes to be rolled out nationally. Starting to teaching financial capability skills at a young age could make a huge difference over the spending behaviour of a generation.

  Banks have been involved in training teachers to teach financial capability in over 300 schools, and putting funding into supporting financial literacy and education projects at all levels.

  The industry is fully aware and supportive of the need for an extensive and reliable debt advice network, channelling substantial resources towards the provision of such services. The industry has recently agreed to fund Money Advice Trust's work to establish a gateway for telephone debt advice, committing £5 million a year over three years.

  Other activities by banks to provide money and debt advice to those in need include working directly with customers on understanding the reasons for their financial difficulties and to help them resolve their problems, including on financial institution having a specialist department for those customers who may be experiencing particularly difficult circumstances such as illness or bereavement.

INCENTIVES AND BARRIERS TO SAVING FOR PEOPLE ON BELOW AVERAGE INCOMES

  APACS has no comments to make here.

THE ROLE OF THE GOVERNMENT, THE FINANCIAL SERVICES AUTHORITY AND OTHER BODIES AND ORGANISATIONS IN PROMOTING FINANCIAL INCLUSION.

  We believe it is the Government's responsibility to educate children and the Financial Services Authority's (FSA) to ensure that adults are properly informed and educated in financial capability, and banks will continue to seek business cases to assist in both areas.

  At the same time, many people's financial needs are heavily intertwined with benefits and taxation issues. Therefore, at the heart of any solution must lie the need to simplify both of these areas to make it far easier for people to understand and operate.

  The Government needs to be joined up in addressing this issue. For example, a one-stop shop approach to queries and problems with tax and benefit issues might well help, and exercises such as a once-a-year "financial health check" by HM Customs and Revenue could be built into existing systems. Once people are better able to understand benefit and taxation issues that relate to them, as well as understand the individual financial products they're being offered, they will be able to make better decisions and take more responsibility for their financial well-being.

  Providing help for communities to meet their wider social needs, including better local educational, training, technological and sporting facilities, forms an important part of the wider area of programmes provided by banks. In 2004, the top five UK community contributors were banks with a total of £144.1 million between them. This work reflects the understanding that banks are an indivisible part of the communities in which they operate and that they have responsibility to ensure that local people receive assistance and strong support with regeneration work.

  Bank contributions have gone towards funding community projects and sustainable sports facilities, allowing staff to use some of their work-time to volunteer to help their favourite charities or community projects, and charitable donations.

THE BENEFITS OF FINANCIAL INCLUSION AND THE EXTENT TO WHICH FINANCIAL INCLUSION MEASURES CAN CONTRIBUTE TO COMBATING POVERTY AND REDUCING BARRIERS TO EMPLOYMENT

  APACS has no comments to make here.

January 2006





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