The history of the CCTA

Access to credit has always been central to the work of the CCTA since it was founded over 130 years ago. Our role has always been to provide credit for individuals that struggle to access elsewhere.

One of our first members was the White Sewing Machine company. This was the biggest purchase for many homes in the 19th century. And not that much has changed, our members still help customers purchase vehicles and household appliances, but also smooth peaks and troughs in their income.

We have a long-standing project to protect access to responsible credit that we often update members on.

In recent months, we have seen a greater interest in access to credit and financial inclusion from a range of external stakeholders which has been encouraging. As such, I wanted to write to let you know about these developments and some of the next steps we will be undertaking.

The impact of a new government

Turning first to the new Labour government, we have seen an increase in their engagement on the issue of access to credit. Even prior to the announcement of the General Election, the Labour Party outlined its commitment to a National Financial Inclusion Strategy, should it gain power. This was reinforced by Tulip Siddiq MP, the Economic Secretary (Minister responsible for financial services), at the party conference which took place in September.

The Secretary said that the Strategy will be designed and implemented by a committee chaired by a treasury minister with representation across government, regulators, and industry.

Through writing to the Secretary, and in our regular discussions with HM Treasury officials, we have expressed our desire to play a role in the process. We believe the experience our members have of lending to those currently excluded will be vital to the development of the Strategy.

Other ongoing discussions

We have also continued to work in partnership with other organisations. We have collaborated with Fair4All Finance for some time and were delighted that their new CEO Kate Pender, took part in our Annual Conference. Kate talked about their desire to work with the private sector on new products, referencing the c.2 billion of estimated current unmet, but potentially commercially viable, credit quoted recently by L.E.K. Consulting.

Discussions continue with members of the CCTA about potential partnerships. It is refreshing to see organisations such as this looking to work with the private sector to develop solutions.

We were also lucky enough to have Chris Pond, Chair of the Financial Inclusion Commission, speak at our conference too. Unsurprisingly, they are supportive of the new Strategy promised by the government. The Commission has released new research carried out by the Centre on Household Assets and Savings Management (CHASM) at Birmingham University, which highlights the harm financial exclusion continues to cause in communities across the UK. This is a problem that needs to be addressed. The report also talks about the costs that financial exclusion causes the UK in terms of lack of productivity and ill health.

FCA engagement on the issue

We have also seen the regulator take a greater interest in access to credit in recent times. The FCA has been keen to engage with the sector on the issue and we have taken the opportunity to raise the role the industry can play in improving access to credit, as part of wider discussions on growth and innovation. Unsurprisingly, we also underlined the need for regulatory certainty to attract investment.

We believe a blend of commercial and not-for-profit providers is needed to solve the current problems and address the use of loan sharks.

Over the last few years, it is well documented that we have tried to draw attention to the significant reduction in the supply of regulated credit for those consumers who cannot access the prime credit market. We know that well-regulated alternative credit can play a role in meeting unmet demand within the wider consumer credit market.

Advocating for a unified approach

Though we support Credit Unions and CDFIs (indeed, they form part of the CCTA membership), these organisations alone cannot fill the gap that has been left. We believe a blend of commercial and not-for-profit providers is needed to solve the current problems and address the use of loan sharks. We can all learn from each other.

This is the message we have been trying to convey in recent meetings. It now seems that organisations across the private, public and not-for-profit sector are keen to work with a government and regulator that is more open to discussion. We must use this as an opportunity to make progress on such an important issue.

Financial exclusion is costly to the country, but also damages the role that people can play in society. The credit products offered by CCTA members allow people to take new job opportunities or get their cars back on the road, improving access but ultimately contributing to the wider economic growth we need and the government is calling for.