Brokering New Partnerships To Deliver Affordable Credit & Financial Inclusion – Investing in Prevention to Improve Life Chances 20 May 2016 Graeme Oram, Chief Executive

Introduction Jimmy – A Bit of a Case Study Some Context The Problem New Models to Create A Step Change in Local Agendas

Jimmy – A Case Study (2007) Long-standing employability customer Tooled up by every available course but no progress into work Biggest barrier - £000s of doorstep and other high-cost credit Debt had created an insurmountable array of issues Local advice services weren’t helping Five Lamps recognised a massive gap in the financial services marketplace …… and our capacity to integrate key elements of the service One of our first borrowers – still a customer Still in the low pay, no pay cycle Small savings Comes to us regularly with issues He can still see the joins in local provision – he doesn’t have great customer experiences He is still one step away from Brighthouse or Wonga or worse

Jimmy – A Case Study (2007) Thanks to Five Lamps’ engagement with Jimmy we are now a leading Responsible Finance provider We’ve made over loans totalling over £30m since 2008 We are a lender and not an advice service, and we don’t offer a savings product We have full Financial Conduct Authority permissions and are fully regulated We have invested heavily in our infrastructure and in securing capital for on-lending We want to work in partnership with local authorities, housing providers, credit unions and the advice sector We are committed to adding real value but local partnerships typically aren’t working – so in most cases we have to do our own thing

Some Context Over-Indebtedness ‘Indebted Lives - The Complexities of life in debt (Money Advice Service 2013) Report ranked all 406 local authorities in UK – Hull (number 1 with 43.1% of the population over-indebted) and Richmond-on-Thames, 406th with 1.2% In our region: –South Tyneside (39.4%) 7 th Hartlepool (36.8%) 10 th –Middlesbrough (36.3%) 14 th Sunderland (35.9%) 17 th –Gateshead (33.9%) 20 th Newcastle (32.9%) 24 th –County Durham (31.6%) 32 nd Stockton-on-Tees (28.2%) 58 th –North Tyneside (27.8%) 62 nd Redcar & Cleveland (26.8%) 75 th –Darlington (25.5%) 81 st Northumberland (24.4%) 97 th Since that report - advice services reduced, credit unions closing and housing organisations reducing discretionary spend.

The Problem Who owns this issue? Who is accountable for it? Who provides the investment? How do we get a shared understanding and shared values? What is the vision that we can rally around?..... and which shakes off organisational boundaries (The Challenge to Professionals) What are the priorities? In Short – The Solution is Strong Partnerships …. With A Clear Agenda for Change and a Commitment to Action It may be that creating strong partnerships to deliver affordable credit itself creates a gateway to wider financial inclusion. Credit is not the customers only need

Affordable Credit Budgeting Income Maximisation Welfare Advice Savings Bank Accounts Debt Advice

Financial Exclusion ‘Win Win’ Partnerships (maybe a brand) Capitalise lenders – Social Investment Bonds Shared understanding of market and market needs Accessible/ Available; Reliable; Flexible; Affordable; Social Heart; Instant; Treats Customers Fairly Accountable Local Leaders More than Financial Inclusion Partnerships LA Lead? Commissioner Lead? Public Health? Business-oriented Partnerships Research Social Impact Education The case for investment…. then investing Building new local models to address Financial Exclusion Unaffordable Credit Unable to Access Mainstream Financial Services Create Infrastructure

All we need is… Strong leadership and accountability at local level A positive policy framework… maybe the Life Chances Strategy A commitment to resourcing community lenders as the catalyst for wider service change Brokerage of new partnerships with new relationships, spanning public, private and social sectors Greater and shared understanding of the market place with shared data sets and widespread publication of data It must be everyone’s agenda