Delivering affordable credit Tuesday 12 July WELCOME The webinar will begin at 12pm

Housing Association Innovation in Delivering Affordable Credit: Research findings Yvette Hartfree

The Research Study 13 case studies: –11 UK housing association schemes –2 Australian community housing provider schemes Literature review explored UK and international evaluation evidence of affordable credit schemes to provide a wider context 3

Scheme design – getting it right What is the scheme aiming to achieve? –replace high cost lending / encourage saving / improve financial inclusion / reduce rent arrears Who is being targeted / eligibility criteria? –all tenants / ‘good’ tenants / excluded tenants Outcomes of getting this wrong –low take-up –higher level of defaults Be flexible and prepared to change the design if needed 4

Scheme Design – what works Key findings: 1.Do not require tenants to save first 2.Quick turn-around for loan approval

Working with Credit Unions Draw on existing relationships Involve them at the design stage Consider the capacity of the credit union Consider whether the credit union products and processes meet your requirements – can they deliver bespoke design elements Regular contact to promote close working relationships 6

Take-up and Scheme Promotion Expectations of take-up were often unrealistic Scheme promotion: –promotion to tenants: direct marketing, events / forums, contact with HA staff –promotion to other housing association staff to raise internal awareness is key e.g. rent officers Momentum and take-up – via word of mouth - takes time 7

Affordable Credit & Wider Financial Inclusion Strategies Most schemes were part of wider housing association financial inclusion strategies Benefits: tenants for whom an affordable loan is not appropriate can be referred to other sources of help e.g. charitable grants, local welfare support schemes, benefit / debt advice

In Partnership with South Manchester Credit Union Widening Access to Affordable Credit

‘Southway Solutions’ Affordable credit for social housing tenants

Why we developed the loan scheme Economic climate, uncertain job market and welfare reform changes (tenants had no reserve funds to cover a ‘home emergency’) Withdrawal of the ‘Social Fund’ More problem debt -Increased numbers turning to high interest lenders Eg Payday loans Credit Union loans often inadequate for needs or borrowers already had one but not repaid enough to extend credit further.

The Scheme Southway – Funded the scheme - £50,000 Eligibility - Southway check tenants have: No eviction authorised No ASB injunction No overdue gas safety checks. Credit Union – Administer /process loans. Southway pay a £30 fee for each loan. Another £30 paid if debt recovery action required.

Products ‘Southway Solutions’ - For any purpose but intended for ‘home emergencies’ ( car repair, cooker breakdown). Can borrow - £100 - £300 Repayment periods 3 mths – 36 mths 42.6% APR (if maintain regular repayments can migrate to CU loan at 26.8% APR) No credit check Same day payment - if all paperwork in order and presented at the Credit Union by 2pm. Interest goes into a Development Fund – used for joint projects

‘Right Track’ Buys tenants out of other high interest loans. £300 - £1000 (same repayment periods) Credit checked For those being supported by the Advice Services Team - Part of a money management plan to put finances back on track. If owe too much to be helped - referred to debt advice Only a few likely candidates to date who were all given alternative help Eg Referral to ‘Stepchange’.

Outcomes First year had double the expected borrowers approx 15 per month. Total of 349 borrowed from Oct 14 to May 16 (20 mths) £95,800 lent out to date Default as predicted running at just over 6% £10K now in Development Fund ( £1078 spent on computer and software for the credit union) Many borrowers are new credit union members and have continued to save and borrow via the CU.

Other outcomes Study feedback – tenants liked speed / ease of application despite higher APR than CU loans. SM Credit Union has now speeded up its own systems – can now process loans in 2 days. We allow older borrowers as found those over 69yrs are excluded from Credit Union loans and other credit. Southway will continue to fund the scheme.

FINANCIAL INCLUSION: WEBINAR DELIVERING AFFORDABLE CREDIT Scott McKinven Financial Inclusion Manager

FI at Affinity Sutton Our Own Credit Union Partnership Working – Pros and Cons Promotional Challenges Overview – Focus on 4 Area’s

Access to money guidance and advice National banking offer Affordable loans Financial education and resilience Support Fund In 2015/16 8,017 financial support interventions 724 individuals supported through GuideLine 1,050 affordable loans taken out 1,651 free debt cases supported

Cost of Setting up a credit union Expertise in managing a credit union More of our residents are used to telephone Experience had shown us engagement is difficult

Partnership Working Pros and Cons Choosing the right partner and having a process in place Clear joint goals and objectives Partnership driven weekly catch ups

Promotional Challenges Frontline – ad hoc Text Messaging – 3% Flyering – 0.1% Outgoing calls – 50% Which would you do?

Mobile: Web: affinitysutton.com/moneymatters

Question & Answer Session Ask our panellists questions using the messenger box