Plend’s latest “Financial Inclusion Report” has revealed the wide-ranging impact of a “cost of living credit crunch” in the UK. The report highlights how this crisis has affected various groups, particularly young people and ethnic minorities, resulting in increased financial exclusion and limited access to financial services. Research conducted by Opinium with over 4,500 respondents shows that 44% of people are struggling to make ends meet due to the cost of living crisis, and obtaining affordable credit has become increasingly difficult.
According to Plend, the cost of living crisis exacerbates existing issues and inequalities, leading to significant difficulties for a large portion of the UK population. The report also notes a growing number of individuals feeling locked out of the financial system, rising from 20% last year to 28% this year.
Furthermore, the report reveals that those who do have access to credit find it challenging to pay off debt or balances. In fact, almost three-quarters of respondents (72%) struggled to repay their loans at some point, compared to 50% in the previous year’s report. This suggests that financial stability among British consumers is worsening.
If left unaddressed, the report warns that people may turn to unregulated and illegal lending options to cope with the cost of living. Trust in financial institutions is also lacking, with only 21% of credit-holding adults believing that loan and credit card companies charge fair rates.
The report shows that 39% of respondents believe that accessing genuinely low-interest loans would greatly improve their financial situation, representing an increase from 27% last year. Plend emphasizes the need for collective action from both the industry and regulators to create a more equitable and accessible financial landscape in the UK.
To achieve this, the report suggests greater transparency around interest rates and the adoption of blind credit applications to promote fairer lending decisions. By implementing these measures, affordable loans can be made more accessible to individuals with the means to repay them.
Robert Pasco, CEO and Co-founder of Plend, highlights the urgent need for addressing the economic inequalities and financial exclusion exacerbated by the pandemic and the current cost of living crisis. Pasco emphasizes the importance of prioritizing financial inclusion to ensure that everyone has access to affordable credit, financial stability, and the opportunity to build a better future for themselves and their families.
The “Financial Inclusion Report” was developed in collaboration with Nationwide Building Society, StepChange, PFRC Bristol University, Green Finance Institute, Ascension, and Fair By Design. For more detailed information, refer to the original report.
Follow crowdfundingmagazine on Instagram: @crowdfundingmagazine_it