New Research Suggests Opportunities for Sector to Support Wider Communities

Friday 19 July 2024

New research from Fair4All Finance, Trajectory and CACI reveals how nearly half of all UK adults are now living in financially vulnerable circumstances – and how credit unions can fill the gap to support those most in need.

The study examines the rising tide of financial vulnerability across the UK, as households continue to grapple with rising living costs. Causes of financial vulnerability range from ill health, low or unstable incomes or a lack of savings to life events like losing a job, bereavement or a relationship breakdown.

Over the last year, the scale and severity of financial vulnerability has grown as persistently high living costs leave more people facing difficulties and add pressure to those who were already at risk.

Many people in this group are using personal loans to cover rent or mortgage payments, taking out high-cost payday loans, and are struggling to manage their debts due to stigma or lack of financial awareness.

Lauren Peel, Director of Consumer Insights at Fair4All Finance commented: “People are having to stretch further and further to keep up with living costs. No-one facing financially vulnerable circumstances should be left to fend for themselves, when help and support is at hand from the community finance sector.”

Latest figures published by the Bank of England anakysing the current state of the credit union sector shows the total number of members of credit unions across Britain increased to its highest point, around 1.53 million members, which has increased to around 32k from the previous quarter. Which is the biggest quarterly increase since 2017. With a year-on-year increase of 6.6%

Total credit union savings also demonstrated that membership savings grew 1.3% from the previous quarter, with a 18% growth from the previous year. The total share value in Q4 is £2.29 billion, surpassing the last quarter as the largest shares ever held by British Credit Unions. The value total shares demonstrate the financial resilience of credit unions and the sector’s ability to have strong position in the mist of the cost of living crisis.

“British credit unions have consistently supported its members and remained steadfast pillars of communities across the country,” says ABCUL CEO, Robert Kelly.  “This annual data shows that credit unions across Britain have stepped up to serve the needs of communities to provide members with safe and fair credit options. As communities across the country continue to navigate their way through the recent squeeze on finances, I am encouraged to see a record figure of credit union members continue to increase.”

The study from Fair4All explores that there is a huge opportunity for the financial services sector to work together to boost financial inclusion for people in vulnerable circumstances

“For many who are financially vulnerable and being declined by banks, parts of the financial system can feel shut off from access and help,” added Lauren Peel, “Credit unions and community development finance institutions (CDFIs) are a vital line of support to ease people’s worries and steer them towards financial stability.

“We need to ensure everyone explores how credit unions can help build financial wellbeing before resorting to illegal money lenders or loan sharks.

“We need a national drive to help people rebuild their savings, access affordable credit and find other help such as debt advice. Credit unions have its doors open and we urge more people to seek out support rather than struggling in silence.”