Welcome to the Treasury Committee on Wednesday 25 March 2026. We are continuing our examination of the Government’s recently published financial inclusion strategy. Today, I am delighted to welcome experts who represent consumer interests, and specifically people who might have particular challenges with financial exclusion, for various reasons. Dr Emma Stone is the director of evidence and engagement at Good Things Foundation, Kate Pender is the chief executive of Fair4All Finance, Helen Undy OBE is the chief executive of the Money and Mental Health Policy Institute, and Michelle Highman is the chief executive of the Money Charity—a very warm welcome to you all. We may be interrupted by votes, but we will come back afterwards if so. I will ask Catherine West MP to kick off.

Thank you, Dame Meg. What is the panel’s overall assessment of the strategy? What does it get right and where does it fall short?

First of all, we should welcome the fact that we have the strategy at all, as well as the fact that financial inclusion is receiving much more attention in Government and in industry. The fact that we are shining a light on it today is also a good thing. From our perspective, we were also delighted that the strategy included financial education and financial capability, because it did not have to. There have been previous financial inclusion strategies or initiatives that have not included them, so it is heartening that somebody decided that this time it ought to. Financial education is a key enabler and driver in financial inclusion and financial resilience. It is the foundation on which we think the strategy ought to be built. At the Money Charity, we believe that the combination of access, skills and knowledge to engage with, manage and control your money throughout your life is really important. We are glad to see it included. More broadly, the framework probably worked, with its pillars, albeit that pensions were missing, but it did feel quite product-focused. For obvious reasons, we were looking at access to credit and insurance, rather than thinking about the person; we were thinking about consumers of financial services rather than about people as individuals. The way it was analysed and the work we did were very focused on the product and did not really think about all the other ways in which we could have thought about the problem, like gender, ethnicity, disabilities, employment status or age—the list goes on. We also did not really consider the elephant in the room: affordability and pricing, which is obviously an important element. There are a whole host of ways in which we could have looked at the issue, rather than just looking at the product. On the detail, we did not have a huge amount of time in committee, although we had three ESTs over that period. The 14 members were not around a committee table for that long. That meant that the business of the strategy was probably done elsewhere, so focus moved to the sub-committees. It was never really explained why we had sub-committees for three of the areas but not for the other three, but it meant that financial education, financial capability and savings and debt were never considered in any real detail. Conversations happened outside the committee, but no sub-committee was set up to analyse and interrogate those issues. That was a shame. Finally, two of the three sub-committees were chaired by people from the industry. Kate did a great job chairing the credit one. We could tell in the committee meeting that of the solutions brought to the table, the credit stream was naturally the most ambitious because the sub-committee was chaired by somebody not from the industry. Ultimately, of course, the strategy was penned by the Treasury. We brought recommendations and suggestions, but it made the ultimate calls. We probably ended up not going quite as far as we might have in some areas, not having outcomes to measure it—I am sure we will talk about that in a minute—and perhaps being a bit too reliant on the goodwill of the industry.

We have a good snapshot there. Ms Undy, without repeating any of that, is there anything further to add?

I agree with a lot of what Michelle said. The six pillars feel like the right six areas. I agree that pensions would be a good build; I know there is a solid reason why that was not included. I thought that the cross-cutting themes were useful, and I know that we are going to talk a little more about the impact that they have had. I agree that although the strategy is a useful step forward, it is lacking in ambition. It relies too heavily on the industry to deliver it, and it does not have the accountability or impact metrics needed for us to have confidence that it is the step forward that we need for financial inclusion. My reflection is that the reason a strategy was proposed is that the market has not delivered for certain groups of consumers who are routinely excluded from products and services. When designing a process, more weight should be given to the voices and experiences of those consumers rather than to the industry and the market, which so far have not delivered the solutions that they need. The way the process was developed did not give sufficient weight to consumer voices. I think it was clear that the membership of the committee was evenly weighted, yet, as Michelle says, we had three meetings of one hour each before the strategy was written and one afterwards, with three different Economic Secretaries to the Treasury. The work of informing the strategy took place outside those meetings, and the imbalance in resources and influence between the consumer organisations and the industry has played out in that. I do not think that the process—particularly the sub-committee process—weighted those voices sufficiently clearly. I am happy to talk more about the specifics if it is useful. I know that there was a conversation at your earlier evidence session about the insurance sub-committee. I noted that at our first meeting of that sub-committee, there were 22 attendees: one from the Treasury, one from the FCA, four from consumer organisations and 16 from industry. The process by which recommendations were taken forward from the sub-committee to the main committee was a process of consensus building. The recommendations that had the greatest consensus were taken forward. To my mind, that was a fairly significant flaw when the weighting of the committee was so imbalanced. That being said, there are some really useful things in the strategy. The work to take forward on travel insurance has some promise. The focus on inclusive design is a big area to celebrate, but I do not think it is ambitious enough. Going into the strategy, we were reflecting that it has been 10 years since we introduced basic bank accounts, which was the last big shift in the design of inclusive banking products. The inclusive design work should be something that could bring the next iteration of what a good core offer looks like in banking. For me, that should include good third-party support, with access for carers, and it should include the tools that people really need in a core offer for truly inclusive banking. At the moment, it remains to be seen whether that will come from it. I have some concerns about the pace of change.

I agree with everything that has been said. I will add two further points to your question, Ms West, and give a different angle. From my perspective, it is important to note that financial services is roughly 12% of all UK GDP. It is a huge sector. Over the past year, there has been quite a divorce between the strategies. The financial services growth and competitiveness strategy, the financial inclusion strategy, the national payments vision, the child poverty strategy—all those things need to come together in a much more cohesive way. Personally, I do not see the distinction between how we grow financial services and how we grow the UK economy. We know that if we deliver on financial inclusion, we get £6.4 billion of economic growth every year. We ended up with two strategies for financial services, and that is probably one of the gaps that we could have tackled somewhat differently. The things we mentioned in our written submission also, somewhat controversially, go back to particular products that were missing, including motor insurance. We hear constantly from people who have missed out on opportunities to improve their life and their outcomes because they cannot afford motor insurance. At one of our conferences, I talked to a man who had had to turn down a job because he lived in a rural area and the job was in an adjacent town. He could afford to buy the car that would have enabled him to accept the job, but he could not afford the insurance. Those are the things that need to be tackled to enable growth to be delivered.

That is a really good snapshot.

I am here for Good Things Foundation and will therefore be speaking specifically to the point about digital inclusion and how it intersects with the financial inclusion strategy. From our perspective, it was absolutely a step forward that, from the outset, digital inclusion was recognised as important. There has been a frustration, which many of us have shared and voiced, about the lack of attention to digital inclusion when we know that financial inclusion now exists in a digital world. That includes more than just access to banking. I suppose that that step forward in recognising digital inclusion may have been mitigated by the fact that the discussion around it has largely been focused on the sub-committee on digital inclusion and access to banking. We see digital inclusion as something that cuts across the breadth of issues around financial inclusion. A positive in the process was Jas Singh’s chairing of the sub-committee. As a sub-committee, we worked hard and put forward three recommendations. As I think Jas commented at your last session, the recommendations very much came from all members of the sub-committee. One is motoring on, irrespective of Government. That relates to the Connection Project, which is an initiative that brings together banks, telecommunications and broadcasters alongside charity expert partners such as Good Things Foundation—Helen is on the expert partner group as well—to think about the choices that the UK needs to make in the transition to a more inclusive digital nation. The first report came out on Monday; I think it is worth saying that the momentum behind it was sparked through the sub-committee process. More broadly, there are certainly some missed opportunities. There is also—this aligns with what others have said—a need for more ambition, more vision and certainly more accountability. I look forward to picking up on the issues around outcomes and measures in the overlap between digital and financial inclusion. The last point I want to make is that Good Things Foundation runs a network of a wide range of community-based organisations. Our database currently includes more than 8,000 organisations. Some are libraries, some are homelessness centres and some are actually Virgin Money banking hubs—that was an example that had a call-out in the financial inclusion strategy. As part of our engagement with the Treasury, we convened 23 organisations on the frontline of providing support to people around money. They all said that digital inclusion and financial inclusion go hand in hand, and increasingly so now, so it is really important that that has been recognised.

When you talk about accountability and about when the market fails, the big question is what the role of Government is and what the role of the market is. During the covid years, when the then Prime Minister had to think about strategies for the tripartite attempt—trade unions plus the CBI, plus Government—to invent a new scheme from scratch. We now have this question about energy. With all the potential things coming, this question keeps coming up: what is the role for Government? We have got very used to the market being able to go for it, with a bit of regulation on the side. What is your expert opinion on the role that the Government should have in financial services? Where is the balance? Maybe Ms Pender could take that, as she chaired one of the sub-groups.

I am happy to have a go, but I would welcome other contributions. The scale of the problem is really large. We are talking about 20 million people in the UK in financially vulnerable circumstances. It probably will not surprise you if I say that there is almost not too much that you could do about this. It is really important that there be a whole-of-Government and whole-of-industry response across the financial inclusion issues. A joined-up approach is essential. From Government, really strong expectation setting is imperative. At Fair4All Finance, we have seen that it is possible for industry to step into parts of the market that it would previously otherwise not serve. Sometimes, that requires some encouragement. I am thinking of things like the no interest loan scheme, which Fair4All Finance co-funded with Treasury, J.P. Morgan and the devolved Administrations. That is a classic example of genuine collaboration.

You have a smile from Mr Grady, the Scottish MP here.

And we should pay credit to the longest-serving Economic Secretary since the second world war, the right honourable John Glen, who introduced that.

That is very kind.

Indeed. The reason why that is a wonderful exemplar is the role of the guarantee that was provided by Government to make that happen. Treasury funded that guarantee for the first phase; Fair4All Finance has funded an extension into the second phase. This year, we will publish a full economic impact evaluation of that pilot. We already know that, as the inducement was there to enable lenders to do something that they would not otherwise do, customers came out of it with 96% customer satisfaction, and lenders came out of it saying, “We didn’t know that we could lend to these people. When we did, they paid us back, and they have gone on to borrow from us on commercial terms without a guarantee.” This is a population whose credit scores, in common parlance, were dire to awful, but who, with that guarantee, could get a small loan in a crisis, and whose payment performance then gave that lender confidence to lend to them again. That is the sort of example that I would love to see more of, with Government and industry coming together and scaling those solutions.

Ms Undy, you have a background in mental health. What are the wider areas of Government policy that are more likely to determine whether the strategy succeeds or fails?

Connecting that to your previous question on what the distinct role of Government is, an important thing about the strategy process was that it brought together industry, consumer representatives and Government. In the end, Government played almost the lightest role in that grouping, in that they played more of a convening role. It felt as though Treasury officials designed the best possible process they could, given that they had very minimal access to funds or legislative time. With those minimal levers, they essentially needed to find good will in the industry to deliver something meaningful. Building a consensus-building process makes sense, but that inevitably does not deliver the ambition that we actually need. For me, where the Government play a key role is in identifying which bits of the market—which people—are not being served by the industry and where we cannot rely on good will and therefore need to step in. I will use travel insurance as an example, because it was discussed at your previous session. The travel insurance work that we are doing with the ABI starts from the perspective of understanding whether risk-based pricing is currently using accurate and up-to-date evidence about people’s mental health. The prices that we are seeing are so high that it feels as though an update to that data and how it is used and interpreted might be needed. Once we have established that we are confident in the evidence base, there is still likely to be a group of people whose more severe mental health needs mean that travel insurance is prohibitively expensive. That is where I think Government play more of a role, because we get to a social policy question: should insurance be an affordable product for everybody? On your question about joined-up policymaking, I think there are two big gaps in the strategy. One is the structural drivers of financial exclusion; we may get on to that separately, but you cannot tackle financial exclusion just by designing good financial products. The second is integrating debt advice with other public services. The neighbourhood health centres policy that has been progressing at the same time has huge potential, but there was a missed opportunity to align the financial inclusion strategy with some of what is happening in the health system.

Please may I follow up, Ms Undy, on the issue of insurance? When we have insurance industry representatives here, they tell us that this is a bit like a black box—there is nothing to see. The FCA has previously looked at these things and said there is no evidence. How do we, as a Committee, get to the bottom of the problem? For many years, you and your organisation have been looking at this, particularly with respect to mental health. What is the best way forward that does justice to those people who, with AI and other things, are perhaps increasingly vulnerable to being further displaced from the market?

There are a few different issues based on different types of insurance products. My instinct is that if we treat them all together, we risk not getting very far, which is one of the reasons why we particularly pushed for the narrow focus on travel insurance and people with mental health problems. In our research, we found somebody who saw increases ranging from 250% to 980% in their travel insurance premium when they disclosed their bipolar disorder. We are not naive; I understand that is how the insurance market works. Risk is priced and it is more expensive if you have a pre-existing health condition, but we still saw increases of 240% for people with depression. We felt, in our research, that the disconnect between the severity of people’s mental health problems and the price increases meant that it deserves further investigation. I think you are right about the black box, but I would challenge the idea that there is nothing to see. The black box is full of information; we just cannot access it. It is the role of the regulator—the FCA—under fair value rules and the consumer duty to take a proper look at the data that is being used to underwrite travel insurance policies.

Do you think the FCA is being proactive enough in getting into the minutiae on this specific area?

No, I do not. The signposting work that the FAC has done on travel insurance, by its own evaluation, has not made a substantial enough difference. It is not a niche market issue and signposting to specialist providers is not good enough when one in four of us have a mental health problem. The point that others in the sub-committee raised about motor insurance is a slightly different one. Increases in motor insurance premiums are being put down largely due to the increase in the cost of parts and the lack of available labour. That does not explain the variation in pricing between people in different communities. That is not our particular area of expertise, but it is an area that I would encourage the Committee to talk to other experts about.

We have been doing that separately, and we continue to examine the insurance industry more widely, not just in this sphere. Moving on to how we hold the Government to account on this issue, Ms Pender, in your written evidence you said that there would be benefit from having some “specific and measurable national targets.” What do you see as a priority? What would you put as the first targets to be measured?

The context is one in which we need some quick wins, some short-term targets, some medium-term targets, and some really ambitious long-term targets. When I think about the long-term picture, I am struck by a few of the stats, which, when you look at them in total, you realise that we have got a problem as a society, not just with the market. The evidence about 20% of households having less than £1,000 in savings is pretty harrowing. I was struck by recent evidence that the chief executive of Lloyds gave, where he pointed out that 70% of people have less than £5,000 in savings. The overall resilience picture is really problematic. We have to have a strong, long-term goal about changing that. I was astonished to see the commentary about the inquiry into motor vehicle finance last year, which revealed that 80% of vehicles in the UK are bought on credit. That is an enormous amount of interest that every single person driving a vehicle is paying. Perhaps that is the sort of long-term set of aims that we could be thinking about. Auto-enrolment savings would be the sort of scaled change; we got 10 million people into a pension provision with auto-enrolment pensions. Over the medium to long term, an equivalent change to really significantly improve household resilience on savings would be fantastic. In the short term, I have been struck by some of the rapid interventions that have been possible on credit. During covid, with support from the FCA and the Government, the banking sector rolled out interest-free overdrafts of up to £500 for three months for 27 million households. They did that in less than a calendar month, so it is entirely possible for industry, without any financial support from Government, to move at scale and at pace. It is those two spectrums of short-term and long-term outcomes that I think we should focus on.

You may not have the information to hand, but do you have an analysis of how many of the 70% of people with less than £5,000 in savings—that was a figure that others have quoted—could have savings? We all have constituents who will not be able to save £5,000, which is a life-changing amount for them, but also some who could be encouraged to save. Which of that cohort could save?

I would be happy to come back with some of that detail.

Yes, it would be helpful if you wrote to us on that.

We have some of that in our segmentation model.

Dr Stone, could you come in on this, particularly with what you think would help Parliament, you and consumers to judge whether the strategy is delivering? At the moment, it is all a bit highfalutin. How does it get to a constituent in Hackney South and Shoreditch on a Hoxton estate, or to someone in Glasgow? How would they understand what is being delivered?

I suppose I am bringing this back again to a digital inclusion link. At the moment, in the proposed outcome indicators, there is reference to one indicator, which would be along the lines of people being able to confidently use online services. It was great to see that included.

It’s a bit vague.

It is vague but, to the point that I made earlier, the key is that for several of those other proposed outcome indicators there are likely overlaps with different levels of digital exclusion or engagement. For some people, that might be about access: can you afford connectivity, and do you have a suitable device? For some people, it might be about skills, confidence and the level to which they are reliant on friends or family—proxy users. At the moment, there is no way for us to understand that. Evaluations of pilots, whether in the fintech world, things that the banking sector may be doing, or some of the pilots outlined, do not capture that. With the University of Liverpool, we have developed three indicators of digital inclusion that are available to use. The Money and Pensions Service, brilliantly, has used those in its recent survey.

We want to come on to digital exclusion more widely, but the question is really about what targets you think could be highlighted. What information should come to Parliament and to others so that we can hold this strategy to account?

Setting targets requires the ability to measure against those targets. For the target of people being able to use online financial tools, understanding what proportion of people are using them, and thinking about that in the broader context, is really important. That is why I go to the point about measures. I could say that that is a good indicator, but unless you can measure it, Parliament will not receive helpful information. There is a real opportunity for this Committee to connect with the Department for Science, Innovation and Technology. You will be aware of the digital inclusion action plan. There are no targets yet for the digital inclusion action plan. I am a member of the digital inclusion action committee. This is an area of conversation.

We will get into that in a bit more detail later. Ms Undy, you said that you rely on the good will of the financial sector and that there should be clear triggers for regulatory intervention. What triggers do you think there should be? You gave a hint about some of the insurance answers.

For me, a clear failure in the impact measures section of the strategy is that the cross-cutting themes are not mentioned at all. I do not think it is meaningful to say that we want to reduce financial exclusion for people with mental health problems and then not measure it as part of the impact measures. The same goes for people with accessibility needs and for survivors of economic abuse. Just as the FCA requires firms, under their regulatory requirements, to understand the outcomes of different groups of consumers, I think that the Treasury should expect, as part of their impact measures, to see that the impact is not leaving any groups behind. If you have a standard set of measures, using the financial lives survey from the FCA—which lots of firms rely upon—you can do a sub-set of people with mental health problems. If there are groups being left behind, I would want to see Treasury—

How would you trigger independent oversight, and at what level? Can you perhaps walk us through an example in your field?

On insurance, we would want fewer people to pay a premium for their insurance as a result of their mental health. Ultimately, we would want more people to have insurance and more people to disclose their mental health conditions as part of applying for insurance.

Basically, measuring the impact on people with, let us say, depression and seeing over time what the impact is, then if it is not dealt with and does not shift, that would be a trigger to have an oversight?

Yes, but I think you could do it more simply by just looking at financial lives data. Any set of metrics that you create to demonstrate the progress of the strategy should be looking at that by the cross-cutting themes. Personally, I think that measuring the success of the strategy needs to happen at three levels. You need overall measures of financial exclusion or inclusion, but the prevailing wind may be blowing in the opposite direction, and it is hard to know the impact of the exact interventions in the strategy within a two-year period. That is why it is important to also evaluate what is within the strategy. That means the pilots, but also the smaller and lighter things. For example, the outcome from the travel insurance work programme should not be a report to Treasury about the number of meetings held; it needs to be indicators of change.

We will come on to some of those in specific areas. I would like a quick yes or no from all of you about whether you think that publication of firm-level data would improve accountability.

Yes.

Definitely.

Yes.

Yes.

I figured that that might be the case—a quick set of answers and unanimity there. The industry has previously proposed to Parliament a six-month time lag. Would a time lag be a problem for you? They argue that doing this in real time would cause them real problems.

The best national dataset that tells us about mental health and financial circumstances has a 12-year time lag, so a six-month time lag would be refreshing.

Okay, so six months would not be the biggest deal breaker for you guys.

I have a few questions for Ms Pender about the role of Fair4All Finance and the strategy. Clearly, you have a very central role in delivering a number of its elements, whether affordable credit, credit union transformation, financial capability or insurance. How would you describe Fair4All Finance’s role in the strategy? Can you convince us that you have the resources and capability to sustain that agenda going forward?

I certainly hope to. In terms of our role in the strategy, we were deeply involved in all of it. I sat on the main committee. I was also on the access to insurance sub-committee and I chaired the access to credit sub-committee. Broadly, the pillars in the strategy follow the same priorities that Fair4All Finance identified when we co-designed our financial inclusion action plan with industry, Government and many stakeholders in 2023. We are tasked with delivering in this strategy things that we welcomed and advocated. I am therefore pleased with what we have been tasked with delivering. To your question about whether we are set up to do it: we are a growing organisation. Last year, we went from 40 people to just over 60 and will grow slightly more this year. However, we are very clear that we are a catalyst. I am not building a team who will deliver customer-facing programmes—that is not how we work. We intend to continue to be relatively small and nimble in so doing. The observation that we made in our submission of evidence was that we are funded through dormant assets. To be really clear, I think that dormant assets are an exceptional UK innovation. As you have probably gathered from my slightly garbled vowel sounds, I am not originally from here. I think that we should export the dormant assets concept. It is an excellent one. However, I would observe that in terms of the scale of the problem, it is an irregular cycle of funding. We need to make sure that, in executing this strategy, we get industry to co-fund and scale the things that work. To Dame Meg’s earlier question about what we should aim for in the long term, my best outcome is that organisations such as Fair4All Finance should no longer have to exist. That is what we should be aiming for.

So success means that you are out of business. I alert you all to the fact that votes are imminent. While Mr Dickson has the floor, if you can keep your answers to the absolute shortest and sharpest, we will get through a bit more before we are delayed by votes.

To follow up on dormant assets, is there too much reliance on short-term funding and the use of dormant assets in the strategy, rather than getting the industry themselves involved at the early stage and taking those forwards?

Yes, and if we are really successful in executing this strategy, you should be able to look at a report in two years’ time which says, “Here is how dormant assets have crowded in tens of millions of pounds in additional funds from the private sector, which have led to positive outcomes for millions of people.” That is the scale of change that is needed. The use of dormant assets to leverage it is a good starting point.

I should declare an interest. Before I became an MP, I was finance director of an organisation, Access—The Foundation for Social Investment—that used dormant assets. Ms Pender, you said that a strategy alone will not deliver change. You just alluded to the crowding in from other market participants. The industry, Government and regulators all need to act. What, in practice, do you need those other actors to do for the strategy to succeed?

To take the example of the small sum lending pilot, which we will mobilise as part of the strategy, we have had a huge amount of support from the FCA and from FOS to get that pilot under way. We are in the final stages of negotiating with a bank to deliver it, as our first delivery partner. I cannot yet share which bank that is, but I will be thrilled to write to the Committee when we are ready to make that announcement. That is the kind of collaboration that is needed to make the strategy work. I would love to be able to come back to the Committee by the end of the year to say, “Not just one bank is doing it, but three.” In two years, I would like to be able to say—with evidence that it has worked—that they are now all running with and scaling it. I am using that specific example, because we drew on the exemplar in the United States of the small dollar loan scheme. Six of the eight largest US banks now deliver that. They are delivering it because it works for them and for their consumers. It does not buy them any credit under the US Community Reinvestment Act; they are doing it because it is a really worthwhile product. Thinking of the art of the possible, if we could get six of the eight largest UK banks to pick up that pilot and scale it, to replicate the scale and pace of impact that they had when they offered 27 million households an interest-free overdraft of £500 for three months in less than a calendar month during covid, that is the sort of pace I would love to see. That takes expectation setting from Government, support from the FCA and FOS, and the private sector properly coming to the table.

The no-interest loan scheme that we were discussing earlier, which has been cited as a big success, is something that we want to see scale up, but there is no Government support for doing that at the moment. Why do you think that is? Is that a problem?

The Government backed the first stage of that pilot. We delivered 14,000 loans and roughly £10.7 million of lending. We were really clear, when we set that pilot up with Government support, that a full economic impact assessment would be done of it. We intentionally delayed the publication of that, so that we could see what happened to the borrowers after they had paid back the loan, so there is a well-intentioned year’s delay in that process. I expect that this year, when we publish that evaluation, we will also publish the business case for how we believe it can be scaled. It will need ongoing subsidy, At the moment, I am neutral on whether that has to be subsidy from Government. The no-interest loan scheme in Australia is not subsidised by the Australian Government; it is funded through the banking sector. The no-interest scheme that is delivered through Fair For You, in its food bank product, is co-funded through us, Shawbrook for banking support, and Iceland as a retailer.[1] There are multiple ways to fund such schemes, and our impact assessment will look at those options, as well as at the business case.

I have one other question, about affordable credit more generally. As a member of a credit union myself—perhaps I should have declared that as an interest at the start—I have seen how important affordable credit is, particularly taking the place of what used to be there in the payday loans market for small loans, as you have talked about, and ensuring that people do not have to do buy-now, pay-later arrangements, which we know are expensive. What do you see as Fair4All Finance’s role in expanding affordable credit more generally, perhaps looking at the credit union transformation fund as well?

We are really excited to be running the credit union transformation fund. Our consultation on that closed on Monday, and we have over 50 responses. I, too, am a member of a credit union, so I am a passionate advocate of them. Fair4All Finance, since its inception, has funded many credit unions, and all the consumer lending CDFIs. We think that community finance is a really important part of the puzzle, to your point, certainly helping prevent people from ending up in the arms of payday lenders and loan sharks. But we have to be cognisant about how small these entities are at the moment. The credit union sector has ambitious plans, which we are thrilled to support. They want to grow their members from 2 million to 4 million. At the moment, we think that roughly 1 million of those borrowers are in financially vulnerable circumstances. With roughly 200,000 borrowers in the CDFI sector, we are loosely talking about 1.2 million or 1.3 million people getting access to affordable credit through CDFI or a credit union in a market in which 16 million people have inadequate or inappropriate access to credit. When you look at those figures, it is very stark and very clear that we need mainstream financial services providers—in particular, every single high street bank—to step up and step into parts of the market that they are currently not serving at all.

We will continue with Dame Harriett Baldwin, but the Minister is on her feet in the main Chamber.

I am about to be interrupted by the Division bell, but I will ask about the trends that are driving exclusion at the moment. We are in 2026. We have had evidence to the Committee that financial exclusion is driven less by lack of access or capability, and more by the fact that there is just no money left after paying essential costs. I wondered if you could summarise what you see as the main trends. To give you a heads up, Ms Pender, you referenced some research about what financial inclusion could unlock in economic impact, and I am interested to know what the main thing is that we would need to unlock, which would have the biggest impact. First, trends generally, Dr Stone.

Overall on trends, digital exclusion is something that you have already mentioned. I think it is important to understand digital exclusion as being complex—some of the issues might be about being able to afford the device, or about connectivity skills, confidence, and so on, but also it is dynamic, so people can fall in and out of digital engagement. Importantly, digital exclusion is an amplifier, I would say. Underlying areas of exclusion can be significantly amplified for people now who also do not have the digital connectivity, skills and support that they need.

That is the big driver increasing digital exclusion—

Exactly. It is one to look for in terms of who, when and how those groups are being impacted by digital exclusion, but also in terms of how digital inclusion can actively be supported and promoted. Sitting suspended for Divisions in the House. On resuming—

Welcome back to the Treasury Committee on Wednesday 25 March 2026. We now resume our session on the financial inclusion strategy. I will not reintroduce the witnesses, but we are going to pick up where we left off before the six votes we have just undertaken. I ask Dame Harriett Baldwin MP to continue.

We were hearing that digital exclusion is a big driver of financial exclusion in 2026, and I was going to ask Kate Pender, what the most transformational change would be to achieve the large economic activity numbers you cited earlier, presumably from your research.

Last year, with WPI Economics, we published research that indicated that we could get £6.4 billion of economic growth if we focused on financial inclusion. That report, if anything, understates that number. It focuses on three things: the connection of people to motor insurance, which would mean that they would be able to take those opportunities I talked about earlier; significant improvements to people’s mental health, because they would have access to products and services that give them peace of mind, reducing things like absenteeism at work and the stress and anxiety that people experience in their lives; and the introduction of savings schemes so that people build up those small savings buffers that take them through a crisis. Those were the three things targeted in that report. As I said, it probably understates the totality of what could be achieved.

If you had to pick one of those, in terms of the scale of the impact it might have on that total, which one would it be?

From my perspective, going back to my point around the long-term outcomes, the thing that could really change the picture overall is auto-enrolment savings. That could have a transformational effect on the resilience of households. Nest Insight’s pilots on that are absolutely emphatic that if we move to an opt-out, auto-enrolment model, we will get transformational impacts through people building up really small sums, because having £300 to £500 prevents someone from experiencing a small bump in the road, like the washing machine blowing up, as a crisis. It becomes just a bump in the road that is solvable.

Does your research prove that that would be the single most impactful intervention?

I believe that it is absolutely the north star.

So for digital exclusion it is about auto-savings. Do the other panellists want to pick out one thing that is driving exclusion, or that would solve exclusion?

On the major drivers, it would be remiss not to mention the rising cost of living and the increasing number of people living in negative budgets. As we have said, the strategy focuses very much on financial services and the debt advice world, rather than on income. It was explained that, understandably, this strategy sits alongside the child poverty strategy, which addresses some of those drivers. But the bit that could have gone in this strategy that is missing is around how you address the £24 billion a year of unclaimed benefits—that figure is from Policy in Practice. We should be talking about how we increase access to income maximisation support for people who are financially excluded and who are living on low incomes. I would like to have seen that in the section of the strategy that talks about debt advice. At the moment, the Money and Pensions Service, which is the main commissioner of debt advice, requires debt advice providers to deliver very light-touch, signposting-only income maximisation support. We are asking debt advisers to try and get people out of debt by looking only at their expenditure, but you would never try to do that in your household budget. The strategy talks about increasing access to digital tools like income maximisation calculators, which for some people will be really helpful, but they can only take us so far. Our research suggests that, particularly for people with more complex needs, like mental health problems, having access to an individual—face to face, ideally, or over the telephone—who can give them income maximisation support can be transformational. That is a key thing that I think is missing in the strategy, but that we could still go further on. I would like to see more on that.

For obvious reasons, my view is financial capability. I agree with everything that everybody said, but I also think that financial education and capability, as a driver of financial inclusion, are really important. We might go into it in a little more detail in a minute, but we could have gone a lot further.

We will come to that, and to you, in detail in a moment.

I will start with Ms Undy on this question. It troubles me that people with mental health issues or a disability are suffering from economic abuse. These are cross-cutting themes, but do you think that, with them being cross-cutting, there is sufficient focus on the journey and how we help people in those situations as individuals?

Taking mental health as an example, for it to be successful as a cross-cutting theme across those six areas, there would need to be a targeted intervention in some of the areas for people with mental health problems, such as a specific review of underwriting practices in travel insurance or an extension of the Mental Health Crisis Breathing Space scheme to Northern Ireland, because people have a specific set of needs that are distinct and different. However, with others among the six pillars, although the experience of people with mental health problems is disproportionately of having a low household income and being more likely to be in debt, the solution may be universal: increasing access to affordable credit or increasing access to payroll savings. So, for some of the pillars, I think you need something specific, but in the ones where you do not need something specific, the inclusive design element is really crucial. As well as people having lower household incomes and being more likely to be in debt, the symptoms of mental health problems can make it really difficult to access products. It is harder to weigh up complex information, to remember details, to communicate, and to use different communication channels and online forms. There are a whole range of things that mean there is a practical barrier to getting access to products and services. When we spoke to Treasury about what it means to have mental health as a cross-cutting theme, there was a lot of focus on the thread of digital inclusion and access to banking. The inclusive design challenge was pointed to, and if we really get that right and develop a set of principles for how you increase access to all products and services, that could be transformational. Personally, I think that the solution we have in the challenge that UK Finance is running does not bring the level of ambition that is needed to meet that across those six pillars. At the end of the two years, we might see a couple of really good interventions scaled. That will be really useful, but I do not think that we will see inclusive access to, for example, payroll savings and affordable credit.

That is helpful. Ms Highman, do you have a perspective on this issue?

On the inclusive design challenge, my perspective is that it feels as though a lot of the onus is on the third sector to come up with and evidence ideas. They have gone through quite a useful process of trying to consult with, I think, about 200 charities. That is obviously to be commended, but to then ask us to spend a significant amount of time producing, essentially, the ideas, the business case, the evidence and everything else, for UK Finance then to try to whittle down to the two or three things that might make a difference just does not feel very balanced. I felt that the industry and UK Finance could be doing more of the grunt work to get us there, because I think we know many of the areas that could be focused on.

We have had evidence that older people experiencing cognitive decline are not well captured by the strategy. Having looked after an older person myself, I can see that that could be the case. What is your perspective on that, Ms Highman?

I think it is true. As I said at the beginning, all sorts of people are not well looked after by the strategy because, other than the three cross-cutting themes, it is not people-centric. It does not look at different types of people and the ways in which they live their lives. Single parents; those who are disabled; the elderly, as you say; younger people; people who are renters—there are whole groups of people who we know have low financial capability and low financial resilience and who are experiencing stress and mental health issues as a result of not having enough money to pay their bills, but also as a result of not being included, not understanding and not having the confidence to manage their money. There is any number of other cohorts of people who are not being specifically well served under the strategy.

On cognitive decline, you are right. There is a shared set of needs that could be met through some kind of almost market-ready solutions. There is great work. Project Nemo is doing brilliant work on supporting adults with learning disabilities, to involve carers and other third parties in financial management. There is the work we have done for adults with mental health problems, and there are the organisations supporting adults with cognitive decline. Involving a third party—a carer or family member—in your financial management at the moment is difficult and onerous to do. A power of attorney is the main way in which you can do it, but more flexible tools are available. Carers cards are available from some banks and not others, which comes back to the case I was making for a better core offer on inclusive banking. There is an opportunity. UK Finance’s inclusive design work will surface other areas where there are improvements to be made. In terms of what I would like to see in the two-year report from Treasury, if I were the Minister, I would be looking at what we are going to take from that that we can formulate into a new, more ambitious core offer, and then at how we are going to take that beyond this coalition of the willing, give it some teeth and make it something you could expect in every bank you walk into.

Before I start my questions, I declare that I am a member of the Financial Inclusion Commission and co-chair of the APPG on financial education for young people. That is a topic I want to address, and I will address my question to Ms Highman. The strategy makes financial inclusion compulsory. That will be done, as has been discussed at the APPG, through the process of getting the curriculum to work. Do you have any reflections on that? There is the short, medium and long term. We have a capability deficit across society. We can sort that out, and I am happy that we are—this Government are—doing that on financial education. But does the strategy say anything more about that gap in capability and what can be done in the short term to deal with the problem?

I think there are a couple of questions there. In terms of financial education specifically being compulsory, we really welcome that, but as we discovered yesterday at the APPG, the devil is in the detail of what the curriculum says and, perhaps even more importantly, the support and budget needed to implement those changes. It is part of a much bigger package of curriculum changes, and certainly at the time of publication, the Government’s response to the implementation was still fairly weak, perhaps understandably. From the conversations we had yesterday—we have also been talking to the Department for Education separately—it sounds like they are on the right track; they are making progress. In terms of talking to the right people, they came and watched a workshop in a school in Greenwich just last week. But the elephant in the room remains whether there will be the budget—it sounds at the moment as though there won’t be—for real implementation of—

By “budget”, do you mean money to create the materials that will be used in primary and secondary school education? What do you mean?

Not to create materials. We have a plethora of resource materials.

What would the money be for, then?

For teacher training and for support—to pay for external experts and organisations like ours to go in and do that delivery.

You are not assured at the moment that that money is being allocated directly?

No. They confirmed yesterday that so far it has not been.

How much money would you need to do this? I don’t mean you personally or your organisation. How much would be needed in the system?

That is a really good question, and one that we have never had a fully fleshed-out answer to because, as things stand, there is no one organisation responsible for financial education and financial capability in the UK. It used to be the case that the Financial Services Authority was. For the first national strategy, the Financial Services Authority committed to £100 million over five years. That was building to a much bigger number, maybe more like £50 million, when we originally set up the Money Advice Service. But over time the money that was being paid for via the levy has, in terms of that that is dedicated to financial education and financial capability, been decimated. All, or 99%, of the money that the now Money and Pensions Service raises goes to debt and pensions advice.

Let’s just try to nail this issue. A wide range of organisations work in this space—financial capability and financial education. You obviously have the Government’s decision on education. You have the Money and Pensions Service, Fair4All Finance, schools themselves, charities and individual firms. I seem to recall that when I was a Minister I spent a bit of time trying to get the banks to come together. How are we going to resolve this so that there is some coherence to the uplift in financial education in this country?

My view is that one organisation should be formally responsible. That should probably be the Money and Pensions Service, but that just is not the case with its current statutory objectives.

And the strategy does not say that, does it?

No, the strategy does not say that, but that is because its statutory objectives do not say that any more. They are responsible for pensions advice, debt advice and money guidance and for co-ordinating a national strategy for financial wellbeing, but they are not responsible for delivering it or paying for it. That means, unfortunately, that they can create as many strategies as they like, but if they are not planning on funding that and paying for it, we will probably not move very far forward. More broadly, there is the issue that we have cut off the tap of funding via the financial services levy for financial education and financial capability, but we have not replaced that with anything, so there is no sustainable central funding for financial education. I never speak to anybody who does not think that financial education is a good idea, but nobody wants to pay for it.

I know that the panel has a lot of expertise in this subject. Ms Pender, is there anything you would like to say on it?

Financial capability, as announced in the strategy, is a new topic for Fair4All Finance. We welcomed being assigned that task.

What can you do? What is your contribution?

The fund that we will launch this year is an initial £15 million on financial capability. We ran a consultation on it, which closed just before Christmas. What struck me about the responses—we had over 40—was how divergent they were, both in their sense of priority and, frankly, ideologically, in how they thought the problem should be solved. It is a very fragmented space. We have seen evidence that over 400 financial capability schemes are currently running, and roughly half are focused on very young people. We are working through what the consultation responses say. My expectation is that we will fund a small number of things to a significant extent, because we think that that is how we best deliver scale and impact, and we will be looking for coalitions between existing providers to do that.

But who is going to be responsible for orchestrating this co-operation to ensure that a minimisation of patchwork and a maximisation of delivery for all?

I can speak to the design of the fund. To be clear, Fair4All Finance does not have the remit for sorting out the 400 entities, but in how we set the fund up, part of our criteria will absolutely be about making sure that the evidence is gathered to see what works, and that those things then have a pathway to being scaled when they are effective. That is the real crux—

So you will establish best practice and then perhaps give an indication as to where the money should go.

That is what we aim to do, yes.

Ms Undy, do you have anything on this, particularly from a mental health perspective? As a Minister, I did some work with you on help for people in debt. Perhaps we will come on to that in a moment, but is there anything in the space of financial education that—

Our perspective on this is slightly different. It is not that I disagree with anything that has been said, but what I was particularly pleased about in the strategy was that the theme was financial capability and financial education, not just financial education. Financial capability is the combination of what you know and how able you are to use that in the moment, in a financial decision. There is an interaction between your knowledge and the design of the products, systems and processes that you use. I don’t think the strategy got into that second part. A lot of the conversations pointed back to the digital inclusion and access to banking stream as the answer, but I don’t think it did answer that. We run a programme called Mental Health Accessible, in which we work with major providers of all kinds of essential services, but particularly with most of the high street banks, to look at how they can design products, services and processes that enable good financial capability. That might be by giving people extra time to make decisions, giving them clearer information or enabling them to put some guardrails around their financial experience—things like setting spending limits or involving a third party. Those kinds of tool are now available from lots of banks, but it is a bit piecemeal and pot luck. When you open a bank account, you do not know whether you will be able to set up a carer or set a spending limit, or whether the specialist team has some kind of training that will be useful for you. With financial capability, we should look again at the core offer. How do we make sure that we have a banking system that enables us all to make the most of our financial knowledge? We know that you can have the very best financial education in the world, but in a period of very poor mental health you can find yourself unable to navigate the system.

Finally, given what the strategy has done on financial education and capability and what it has said, what should be the Economic Secretary to the Treasury’s ask of UK Finance? I think it is Eric Leenders. What should she be asking him and the banks?

Building on the previous conversation, I agree with Ms Undy that the issue is not sufficiently addressed. When we are talking about financial capability, as distinct from education, we also start to think about lifelong learning and adults, not only what happens within the school environment. On the challenge and opportunity of the digital world, we have barely mentioned AI, but obviously it is likely to be playing a larger part in people’s money management, whether they are aware of it or not. To your point, there is something here about asking how we get better co-ordination by building financial capability and digital capability together. That is one of the areas that is touched on in the Connection Project report. It is going to be producing a road map, which is due to launch in September. This is an area in which it is so important to think about financial capability and digital capability together, because the digital world is continuing to change. Digital can be an amplifier of exclusion; it can also be an enabler of inclusion.

What should the Economic Secretary to the Treasury ask UK Finance, though?

She will be in front of us, so this is your moment.

I would be keen for her to ask UK Finance what the end point is of its inclusive design challenge. When do we know whether it has succeeded? The way it is designed at the moment, it will pick a couple of useful things and scale them, but that does not meet the level of ambition of the strategy. I understand that it is resource-intensive to run, but I would like to hear a clearer articulation of what we are aiming for.

Along the lines that you mentioned, I would be keen to ask her for the banks to stop supporting their own branded programmes, and to use that money in a much more sustainable and central way. Maybe it should go back through a levy again. At the moment, as you know, they all have their programmes, but so much of that is about brand. I dispute the idea that there are 400 organisations delivering financial education, but even if there were, the reason is that there is no central funding, so lots of people all around the country are popping up trying to do their best. There are probably only four or five main charities working in this space, and we all do something slightly different. Some of us work in primary schools, and some of us work with adults. We work in the workplace; a lot of what we do is with adults, not young people. On Monday, we were at the City and Hackney Carers Centre in your constituency, Chair, talking to unpaid carers about their money and helping them to manage better. We try to reach everybody, and that is a big task—there a lot to do. There are four or five big charities that, collectively, have a budget of less than £7.5 million in this space. That is nowhere near enough. The issue is not that we have too much in this space; it is that we have too little.

A quick-fire question: what would you ask the Economic Secretary?

“How are you ensuring that digital inclusion is baked into all aspects of the financial inclusion strategy?”

“How do we get the mainstream financial services providers to make sure that they are maximising their insight into what is happening in a consumer’s life, to nudge them to the right decisions and products that will really have an impact?”

Brilliant. Anyone who is following this should watch this space, because the Economic Secretary to the Treasury will be in front of us on this issue in due course.

I do not see banking hubs as the same thing as addressing digital exclusion. Am I wrong?

I would not see banking hubs as the same thing as addressing digital exclusion, but I do see them as part of the picture. I have just mentioned digital inclusion being baked in rather than bolted on. Our partnership with Virgin Money is a great example of what a banking hub can do. In Virgin Money’s banking hubs and stores, it is enabling, encouraging and supporting its staff in store to provide free mobile data SIMs and vouchers from the National Databank, which is an initiative led by Good Things Foundation with the support of VodafoneThree and Virgin Media O2. That means that they are starting to have conversations that help unlock whether someone is facing a fundamental digital barrier. There was a store in which a member of the team identified that someone was facing challenges in accessing the internet. They could not afford to pay for mobile data. They were given a free mobile SIM through the National Databank. They were also given advice and information about using a benefits calculator. Through that, they unlocked entitlements to which they were eligible. That is an example of what happens when a service provider recognises and takes seriously the fact that there might be certain barriers or vulnerabilities, and you empower your team to respond. The same applies to Post Office branches or local Age UK branches. Some of them are members of the national digital inclusion network, which we co-ordinate. Some of them are providing support to people to get online and to benefit from the digital world. Across different Government areas and across people’s lives, this is about thinking about how different trusted touchpoints in communities, like banking hubs, libraries, community centres or family hubs, can surface, understand and respond to the digital barriers that people may be experiencing. Does that answer your question?

No, because I think it removes the need that many people have for face-to-face interaction and relationships that give confidence. There are a significant group of people who have access to the internet and may go online to see what their friends and family are doing, but that does not mean that they want to do their financial business in that way, either because of a very reasonable fear of scams or because of a lack of confidence.

Absolutely. I am so glad that you explained that. The heart of the national digital inclusion network is community-based organisations that are absolutely about relationships and being that point of connection. For many of them, digital inclusion is just one small part of what they are doing; they are doing it because increasingly we are living in a digital world. In the absence of more co-ordinated or structured forms of support, people are often knocking on doors and asking, “Can you help me with the NHS app?” or this, that or the other. Please do not take it from this that Good Things Foundation is focused on digital technology first. This is about people, and about enabling people to live and benefit in a world that is becoming increasingly digital across all areas of life. The question about banking hubs is “How can banking hubs be part of that social infrastructure, which enables people to get online and benefit if they so choose?”

The NHS app is a great example, but using it is not the same challenge as moving money around, which comes with much more risk.

Yes, and you are right, with several groups. I go back to the support thing, because you are absolutely right that the fear of scams and fraud is a significant barrier or reason why people might choose not to use online banking, even if they are going online for other things such as using search or for keeping in touch with family and friends. We need to work together on lots of interesting and important challenges, with fintechs, banks and organisations like Good Things Foundation. That leads back to the inclusive design point, because there are ways in which online banking can be safer as long as you have the access, the connectivity and the support to be able to benefit. We certainly hear stories, through the network, of people who thought that they would not use it, but who have been supported to give online banking a try and have then found that actually it has really enhanced their independence. It gives them more control. Through the data from the consumer digital index that Lloyds produces, we can see that increased control and agency in your financial circumstances fits in with increased engagement digitally. How can we do better to get that win-win for people? As you say, though, we have to recognise that some individuals might not want to do that. There is certainly a need for tailored support and the in-person community access. We do not see the digital and the community as entirely different tracks. We think that you can have a great digital offering and great in-person support as well.

Except that that does not exist.

That is where I would make the point about how we need to think about digital inclusion more broadly, with wider social infrastructure, and about how we support different, trusted local touchpoints, whether those are GP surgeries, banking hubs or community organisations, to know how to provide support to engage with the digital world.

Are we in the same position that we were in with the previous set of questions about financial education? There is a patchwork of loads of different organisations, so significant numbers are falling through the net. If we have 250 or 350 banking hubs, I do not know how many branches of Age UK or whoever there are, but large swathes of the country will have nothing.

That is absolutely right, as a reflection of the challenge. There are two ways to think about this. One is that a patchwork of different organisations having that coverage, having different touchpoints, can be a really powerful enabler of inclusion, if those touchpoints are equipped and resourced to respond to the challenges in their community. We can also think about the network of library branches, which offer different levels of support to people on digital inclusion. Some might provide a co-located money and benefit support, or some co-located health support. They are not all able to do the same thing. What they need is the resource, the guidance and the expectation of the resource that comes with that. Local authorities have a key role as well. That is certainly what we are finding through the work, led out of DSIT, on the digital inclusion action plan.

I thank our witnesses very much indeed for their time. We have had a good discussion about why people are financially excluded; how we can possibly include them better; the challenges of the strategy and of delivering it; the challenges of measuring outcomes; and the smorgasbord or plethora of organisations out there already doing great work on financial education and financial inclusion, and how they can be helped to do their job better. Just because they are there, that does not mean that there cannot be room for improvement. I thank you for your honest and candid answers and for your thoughts on what we can put to the Minister, who will be in front of us in due course; I cannot remember the date off the top of my head. The transcript of this session will be available on the website, uncorrected, in the next couple of days. Thank you to our colleagues at Hansard, and to our colleagues at Bow Tie for the broadcasting. [1] Fair4All Finance representatives later corrected that the product in partnership with Iceland is called ‘Food Club.’