For many of these consumers, access to regulated credit isn’t a “nice to have”. It plays a practical, everyday role in helping households manage essential purchases, smooth out income ups and downs, or deal with unexpected costs.

We welcome the ambition behind the Strategy and its recognition that financial inclusion is a complex, multi-dimensional issue. However, from a consumer credit perspective, there is a real risk that access to regulated credit – a core part of inclusion – is being overlooked at a crucial moment.

When regulated credit becomes unavailable or too tightly restricted, the need for borrowing doesn’t go away. Instead, it shifts elsewhere: into unmanaged debt, informal borrowing, or illegal moneylending. There is growing evidence that this kind of displacement has increased as parts of the regulated non-prime credit market have shrunk in recent years.

Financial exclusion in credit markets is being driven by a combination of reduced access to regulated lending, contraction among smaller and specialist lenders, and regulatory frameworks that don’t always reflect real-world financial lives. Consumers who fall outside prime or automated lending models are increasingly unable to borrow sustainably – even when they could afford to do so.

At the same time, rising compliance costs, cumulative regulatory burden and ongoing uncertainty have made it harder for lenders to operate, particularly in non-prime and high-cost credit. This has led to firms exiting the market and less competition overall. As regulated options narrow, the risk of people turning to illegal or high-risk lending grows.

These pressures are made worse by geographic and digital exclusion, as well as low trust among consumers who have experienced repeated credit refusals. In many cases, people aren’t disengaging from the system – they’re being turned away by it.

The Financial Inclusion Strategy rightly recognises access to credit as an important part of inclusion and reflects a welcome shift towards prevention and resilience. However, in the CCTA’s view, it doesn’t give enough weight to the supply-side pressures that are actively reducing access to regulated credit.

There is limited acknowledgement of how regulatory uncertainty, retrospective reinterpretation of standards and cumulative compliance costs affect lenders’ ability – and willingness – to serve higher-risk or non-standard consumers. Without tackling these issues, the Strategy risks placing too much emphasis on demand-side solutions while regulated supply continues to shrink.

Two gaps stand out in particular. First, the Strategy does not fully engage with evidence showing that reduced access to regulated credit can push people towards illegal or harmful lending. Second, while not-for-profit providers play an important role, they cannot meet demand at scale on their own. Responsible, FCA-regulated commercial lenders are essential for providing reach, sustainability and volume.

For the Strategy to succeed, its targets and monitoring must reflect how credit markets actually work. Progress should be measured using supply-side indicators such as the number of active regulated lenders serving non-prime consumers, the range of products available, credit refusal rates, and signs of displacement into informal or illegal borrowing.

Policy design will also matter. Consumer protection measures are vital, but if applied too rigidly they can unintentionally restrict access for the very people the Strategy aims to help. Proportionate, predictable regulation is key to making inclusion work in practice.

Early priorities should include stabilising access to regulated credit, preventing further market contraction, and improving regulatory certainty for lenders serving higher-risk consumers.

The Financial Inclusion Strategy is a positive step forward. Its success will depend on recognising that financial exclusion is not just a consumer issue, but also a market design issue.

In consumer credit, meaningful inclusion depends on having a diverse range of providers, proportionate and predictable regulation, and a clear understanding that access to credit is itself a vital consumer outcome. The CCTA stands ready to continue engaging with policymakers to help ensure the Strategy delivers real, lasting benefits for consumers across the UK.