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component in the market overall, with 96% of cash withdrawn during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
27 Not printed. Back
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