Action for Financial Inclusion (AfFI)

What we do

Action for Financial Inclusion (AfFI) has been set up to turn ideas on promoting financial inclusion and resilience into action. It is a Community Interest Company with charitable purposes.

Post the 2008 financial crisis, the UK made little progress in tackling financial exclusion and helping households build financial resilience. This is despite spending significant resource on research, financial education and innovations like fintech.

Now financially vulnerable households are having to deal with the aftermath of the Covid-19 pandemic and the prolonged cost-of-living crisis. These economic shocks exacerbate the problems many families face.

We must all learn lessons from the national failure to build financial resilience after 2008 and find solutions that work.

Helping people build up savings or insuring against financial shocks is a priority. It would help end the vicious cycle of people borrowing to make ends meet, failing to build up saving and then borrowing all over again.

For the times when borrowing is the right option we need to expand access to fair, affordable and sustainable credit for groups which are underserved and hard to reach.

Another clear priority is promoting long term financial security and decent retirement provision.
The scale of the challenge ahead of us is set out below. We now need to build a bridge to essential credit and wider financial inclusion. 

The scale of the challenge facing us

Without doubt, 2022 was a tough year for millions of UK households, particularly for those on low or uncertain incomes. The Office for National Statistics found recently that the cost of living had increased for most people (93%) over the year.[1] The proportion of adults finding it very or somewhat difficult to afford their energy bills, rent or mortgage payments rose throughout the year. Forty five percent of adults who paid energy bills, and 30 percent paying rent or a mortgage, reported difficulty in affording them.

In their responses to the cost of living crisis, 52 percent said they were using less fuel such as gas or electricity in their home, and 15 percent said they were using more credit than usual.[2]

Financially vulnerable households have been hit by waves of crises over the past decade and a half. Earnings have been squeezed, in real terms, since the 2008 financial crisis. Because the UK failed to help households build sufficient financial resilience after 2008, millions of people went into the Covid crisis in a very vulnerable financial state. The economic effects of Covid were still being felt when households found themselves facing the current prolonged cost of living crisis driven mainly by the huge rises in energy prices. Economic forecasts suggest little immediate prospect of respite for low income households.

It is deeply concerning that so many people have so little financial resilience to speak of that they are very vulnerable to financial shocks, whether caused by major external economic events or changes in personal circumstances. People can easily get trapped in a vicious cycle where low levels of financial resilience leaves them more vulnerable to getting into financial difficulties, which in turn makes it harder to build up savings as a cushion against future financial shocks.

Nine million people in the UK have no savings and a further five million have less than £100. So, fourteen million adults(one adult in four) don’t even have £100 at hand to cope with financial shocks.[3]

People turn to credit to make ends meet. Access to fair and affordable credit is an important part of financial inclusion and will be important in future to provide a bridge to financial resilience and inclusion.

People who over-consume credit undermine their own efforts to save for the future, become overindebted and get into financial difficulty. Nearly eight people in 10 use credit, and 43 percent of those are now anxious about how much they owe.[4] Credit card borrowing grew at the fastest rate since 2005.[5]

Currently, there are 4.5 million people and small/ micro enterprises with at least one outstanding county court judgment (CCJ).[6]

Millions also lack basic insurance, an important aspect of financial resilience. Nearly one in three adults (either solely or jointly have no contents insurance. Only 38 percent of Black or Black British adults, and just 23 percent of renters have contents insurance. People who live in the most deprived areas of the country[7] are half as likely to have contents insurance as those who live in the least deprived areas.[8]   

There has been progress in some areas. Pensions auto-enrolment continues to improve the proportion of workers with a pension. According to the FCA, 70 percent of non-retirees in February 2020 had a pension, up from 62 percent in 2017. Among the 25-54 age group, 90 percent had a pension in accumulation in February 2020, up from 82 percent in 2017.[9] Of course, the job is far from done. Groups with a worrying lack of pension provision include the self-employed,[10] women[11] and minority ethnic communities.[12]

On the banking side, FCA research found that 98 percent of UK adults now have a ‘day-to-day’ bank account.[13]

But, while progress in these areas is welcome, it does not improve the protection against immediate economic shocks. Major policy interventions, outside the scope of our work, will be needed to protect the most vulnerable households from future external economic shocks on the scale seen in the past decade and a half.

A financial cushion can reduce the impact of external macro-economic shocks in the future. It can help people cope better with household-level financial shocks such as having to pay an unexpected bill, replace a broken fridge or deal with loss of income. Building financial resilience can help break the vicious cycle we have described.   

Rarely since the war has the case been as convincing at it is now for helping the financially vulnerable to save for future rainy days and to borrow safely.

AfFI is now helping to implement the changes needed, based on the evidence of clear research which supports irrefutably fair arguments.

[1] Impact of increased cost of living on adults across Great Britain - Office for National Statistics (ons.gov.uk)

[2] Ibid, Table 1.3

[3] One in six UK adults have no savings | The Money and Pensions Service

[4]  Ibid

[5] LPMVVUZ, LPMB4TQ, LPMB4TC data series | Bank of England | Database

[6] Registry Trust,  Better Data Could Help Tackle The Cost Of Living Crisis (registry-trust.org.uk)[7] Ibid, Fig 2.1 Day‑to‑day accounts held by Overall, 97% of UK adults (50.6m) year (April 2017/Feb 2020)

[7] As measured by Indices of Multiple Deprivation (IMD)

[8] Financial Lives 2020 survey: the impact of coronavirus | FCA, financial-lives-survey-2020-tables-volume-3-product-ownership-part-2, Table 113

[9] Financial Lives 2020 survey: the impact of coronavirus | FCA

[10] Ibid, p55

[11] Ibid, Fig 2.21,  Proportion of adults who are currently contributing to a pension by gender and life stage (Feb 2020)

[12] Squeezed-out-or-opting-out-February-2023.pdf (smf.co.uk)

[13] Ibid, Fig 2.1 Day‑to‑day accounts held by Overall, 97% of UK adults (50.6m) year (April 2017/Feb 2020)

Our Current Priorities

AfFI is currently focusing on promoting awareness of workplace payroll savings schemes. Research by The Financial Inclusion Centre (Feb. 2021) revealed clear strong evidence of the positive impact payroll savings can have on financial resilience amongst lower-medium income workers with two major employers in Yorkshire.

Getting Workforces Savings-Payroll Savings with Credit Unions | The Financial Inclusion Centre.

Building on this key research for the government’s Money and Pensions Service, AfFI is now adopting a national and regional approach to the systematic promotion of payroll savings across the UK, starting with Scotland and funded by the Scottish Government. Other parts of the UK will follow.

How to contact us

For general information on the work of AfFI, please contact Mick McAteer, Co-Director, at mick.mcateer@affi.org.uk or call 0783 779 7748.

For information on workplace payroll savings, please contect Graham Brough, Co-Director, at graham.brough@affi.org.uk or on 0754 550 4863.

The Team

Malcolm Hurlston: Malcolm is Chair of AfFI. For people working in the financial inclusion field, Malcolm needs no introduction. He is a man of action in a world of talking, a real life social entrepreneur who has started a number of successful social businesses and not-for-profit organisations that make a difference to people’s lives. 

Graham Brough:  Graham has dedicated four decades to utilising research reports and investigative journalism to help improve society at the Sunday Times, Mail on Sunday, Daily Mirror and Yorkshire Post.  He was also a war correspondent. He is formerly CEO of the CEBR economics research organisation.

Delroy Corinaldi: Delroy is a very experienced public affairs strategist. He is currently on the board of New Philanthropy Capital. He was previously Head of External Affairs at StepChange and Senior Public Affairs Officer at Which?, Europe’s largest consumer organisation. He was one of the original founders of The Financial Inclusion Centre.  

Mick McAteer: Mick is a high profile campaigner for economic and social justice with long experience of representing consumers at UK and EU level. He is Co-Director of The Financial Inclusion Centre, Chair of Registry Trust and anti-poverty charity Z2K, deputy Chair of The Consumer Council of Northern Ireland, on the Council of The Irish Financial Services and Pensions Ombudsman, and on the board of Caritas Westminster. He was previously on the board of the Financial Conduct Authority/ Financial Services Authority. 

Dr Robert Barr OBE: Robert is an urban and social geographer who has spent much of his career measuring and tracking social inequality. He is currently a Visiting Professor at the Geographic Data Science Laboratory in the University of Liverpool. He was previously a member of a Cabinet Office Social Exclusion Unit Policy Action Team, a member of the Advisory Panel on Public Sector information and the Open Data User Group. He spent 13 year on the boards of two major providers of Social Housing and was chairman of Caribou, a company delivering affordable warmth and sustainability measures for low-income households. He is currently Chair of Lymm Community Energy.