Tackling financial exclusion: A country that works for everyone? Contents

Summary of recommendations

Chapter 3: Leadership from Government and proactive regulation

1.We recommend that the Government should appoint a clearly designated Minister for Financial Inclusion. The Minister should have lead responsibility for promoting financial inclusion and should be supported with appropriate resources to co-ordinate effectively work to address financial exclusion. (Paragraph 65)

2.We recommend that the Government should set out a clear strategy for improving financial inclusion in the UK. The Government should lead and co-ordinate on the implementation and monitoring of this strategy. This should be one aspect of a wider Government strategy to address comprehensively the issue of financial exclusion. We believe that the recommendations in the remainder of this report should form a key part of this wider strategy. (Paragraph 75)

3.We recommend that the Government should also provide an annual report of the progress made towards addressing financial exclusion across the UK, with work on this led by the Minister for Financial Inclusion. The report should be presented to Parliament as a Command Paper. We recommend that the first such report should be presented to Parliament within 18 months of the publication of this Select Committee report. (Paragraph 76)

4.We recommend that the Government should expand the remit of the FCA to include a statutory duty to promote financial inclusion as one of its key objectives. Government leadership of the financial inclusion agenda must be supported by proactive regulation. At present, the work of the FCA in this field is limited by the objectives defined in its statutory remit. (Paragraph 84)

5.We recommend that the Financial Services and Markets Act 2000 should be amended, in order to introduce a requirement for the FCA to make rules setting out a reasonable duty of care for financial services providers to exercise towards their customers. Such a duty will promote responsible behaviour on the part of businesses and support sound financial decision-making by customers. (Paragraph 89)

Chapter 4: Financial education, advice and capacity building

6.We recommend that financial education should be added to the primary school curriculum. This measure alone, however, will not be sufficient to enhance the level of financial education provision in schools; experience since the 2014 addition of financial education to the statutory secondary school curriculum in England suggests that additional measures are necessary. (Paragraph 103)

7.We recommend that the Ofsted Common Inspection Framework should be updated to more explicitly address the extent to which schools provide young people with financial knowledge and skills. Such a measure will help to ensure that schools attach an appropriate degree of priority to financial education and learning. (Paragraph 109)

Chapter 5: Financial exclusion and vulnerable groups

8.We recommend that the Government and regulators should work together to develop an approach to promote further innovations in the provision of online and mobile banking services to older people. The central objective of this initiative should be to develop new platforms and apps that can simplify access, security and interface in an age-appropriate way, while maintaining the high level of integrity and security required to reassure and encourage take-up among the older age group. (Paragraph 166)

9.We recommend that the Government should work with the financial services industry and the FCA to develop and introduce a wider range of ‘control options’ for those customers who may experience mental health problems. Such options would allow people to opt in voluntarily to a series of controls which limit the potential for financial harm. (Paragraph 176)

10.We recommend that the Government, working with the FCA and the British Bankers’ Association, should carry out a review of reasonable adjustment practices for disabled customers. The review should identify areas of good and bad practice, as well as areas where current provision needs to be improved. The initial review should be published within 18 months of the publication of this Select Committee report. Subsequently, and within the lifetime of this Parliament, a timetable identifying target dates for the delivery of improvements should be set out, monitored and implemented. (Paragraph 192)

Chapter 6: Access to financial services

11.We recommend that the Government should require banks to promote their basic bank accounts appropriately and effectively, both in store and in advertising. In evaluating the ongoing rollout and uptake of basic bank accounts, the Government should address the concerns expressed to us that not all banks are issuing an equivalent proportion of these accounts, and that the cost burden of offering the accounts is not shared appropriately across the sector. (Paragraph 204)

12.We recommend that the annual report which we have proposed in recommendation 3 should contain updates on the rollout of electronic identification for bank accounts—particularly in regard to the success of bringing previously unbanked people into the banking system. The annual report should also provide an update on the level of acceptance by banks of Universal Credit and other non-standard but legally sufficient identity documentation. (Paragraph 215)

13.We recommend that the Government work proactively with the Post Office and banks to fund and launch an extensive public information campaign on the banking services that are available through Post Office branches. The Government—as sole shareholder in Post Office Ltd—should also ensure that the Post Office provides adequate training for staff at branches within retail outlets, so that they can carry out banking services for customers with confidence and competence. (Paragraph 237)

14.We recommend that the Government should ensure that non-digital access to social security benefits, and other services, remains possible. Access via free telephone lines, and through face-to-face meetings where appropriate, should remain available indefinitely. (Paragraph 261)

Chapter 7: Financial exclusion, credit and borrowing

15.We recommend that regulations to limit and manage the negative impact of unarranged overdraft charges should be introduced. The potential for such regulations should be assessed as part of the ongoing FCA review into high-cost credit. (Paragraph 274)

16.We recommend that the Government provide all necessary assistance, including legislation where needed, to further combat financial exclusion caused or exacerbated by high-cost credit. We believe that the FCA review of the wider high-cost credit sector should consider seriously the potential value of further regulatory action. Regulations should be put in place in other parts of the high-cost credit sector, particularly the rent-to-own sector; we hope that the FCA review will give full consideration to this possibility. (Paragraph 300)

17.We recommend that the Government should expand the scope of products that credit unions can choose to provide to their members and, where appropriate, should amend the rules under which credit unions operate in order to enable them to take up these opportunities. (Paragraph 321)

18.We recommend that the Government funding provided to the sector should take the form of repayable, long-term investment capital rather than grant funding for ongoing expenses—following the pattern of the successful Financial Inclusion Growth Fund. We also recommend that the Government should work with representatives of the banking and credit union sectors to develop proposals to increase the lending, at reasonable rates, of investment capital to credit unions. (Paragraph 322)

Chapter 8: Welfare reform and financial exclusion

19.We recommend that the Government abolish the seven-day waiting period at the start of a Universal Credit claim; the waiting period contributes to sometimes lengthy delays in claimants receiving their first payment. These delays put claimants at significant risk of falling into arrears. (Paragraph 349)

20.We recommend that the Government should allow for greater flexibility in the frequency of Universal Credit payments in England and Wales so that, where monthly payments would contribute to a claimant’s financial exclusion, payments can be made twice-monthly, as will be possible in Scotland and Northern Ireland. This could be on the basis of a DWP decision-maker decision or on the basis of a Trusted Partner scheme with local authorities or social landlords. (Paragraph 360)

21.We recommend that tenants in receipt of Universal Credit in England and Wales should be allowed to decide for themselves whether their housing costs should be paid to them or direct to their landlord. (Paragraph 371)

22.We recommend that the Government conduct a detailed, comprehensive cumulative impact study of how changes in social security policy resulting from the Welfare Reform Act 2012 might have adversely affected financial wellbeing and inclusion. This research should consider the extent to which these changes have contributed to debt and arrears and to any greater reliance on high-cost lending. (Paragraph 395)

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