Economic Secretary on financial inclusion
We should be seizing every opportunity to make financial inclusion a reality, says Andrea Leadsom.
Today we have heard a call to action on financial inclusion; and a powerful reminder that across the world, financial exclusion is one of the biggest barriers to development.
We in the British government also attach real importance to increased financial inclusion to improve the lives of many of the most vulnerable in our country. And we know that all over the world, other countries are tackling similar issues.
I visited Mumbai at the end of last year and discussed financial inclusion with the major Indian banks.
We agreed that it was a global issue.
In India as in the UK, they face the challenge of getting banking services to people living in rural areas against an environment where banks face cost pressures to close branches.
Although the scale of our challenges are vastly different, we agreed that there was a key role for financial technology to play.
And in fact the banks in this country could be learning from their Indian counterparts on provision of mobile payments or SmartATMs which not only allow you to withdraw and deposit cash, but book seats at a concert or even train tickets.
And 바카라 사이트 importantly 바카라 사이트 we can all learn from each other in tackling this problem.
The work our Department for International Development (DfID) has carried out includes supporting the use of technology like mobile money and branchless banking, as well as working with institutions to change regulations and trial new services.
I am delighted that it has enabled 31 million more people across the world to access financial services 바카라 사이트 which, as we have heard, is so often the first step in allowing them to flourish.
The Treasury and DfID continue to work closely together on international issues 바카라 사이트 including remittance payments, more on which later.
Today, I would like to talk about the work we have been doing here in the UK.
And I want to give us all a challenge. For although we have made real progress in a number of areas, I would argue that the huge technological changes we are seeing year-on-year have the potential to usher in a new era of financial inclusion.
To get there, we will need concerted action by government, industry, and also third sector working together 바카라 사이트 especially within communities.
I am passionate about this because there is huge potential!
Because financial inclusion not only helps the individual and their family, but it can also be a powerful driver of economic growth.
So we should be seizing every opportunity to make it a reality.
The UK 바카라 사이트 like so many countries worldwide 바카라 사이트 was hit hard by the global financial crisis of 2008.
It left many banks derisking and deleveraging.
And there were other factors on top of that which conspired to make 2008 the perfect storm.
In the 1980s we had already seen the introduction of free-while-in-credit banking 바카라 사이트 subsidised, partially at least, by bank charges 바카라 사이트 which unsurprisingly started to get bigger and bigger.
That was also the decade where credit cards started to become an increasingly present feature in people바카라 사이트s wallets 바카라 사이트 and 바카라 사이트credit card debt바카라 사이트 entered our national vocabulary.
In the nineties and noughties, the retail banking sector underwent significant changes. Structurally, it was an era of consolidation and demutualisation.
All of which meant that when the financial crisis came, the financially vulnerable had very little support.
And this proved fertile ground for private debt management providers and the emergence of the payday lending industry, with its exorbitant interest rates and dubious collection methods.
I know from my constituency, and from the letters I receive as a minister in the Treasury, that the aftermath of the financial crisis was devastating for many of the most vulnerable in our society.
Many people 바카라 사이트 who, for one reason or another, are outside the financial system 바카라 사이트 struggled to get back on their feet.
Helping drive prosperity for all has been a key priority for this government.
It바카라 사이트s why we have paid particular attention to job creation. We have 1.75 million more jobs than we did in 2010. There are more people in work now than ever before and unemployment has fallen to 6%.
And, crucially, wages are rising above inflation 바카라 사이트 by 4% for those in full time work for over a year.
It바카라 사이트s why we바카라 사이트ve cut the taxes of 25 million people on low and medium incomes 바카라 사이트 including taking the bottom 3 million out of tax altogether.
It바카라 사이트s why we increased the minimum wage and scrapped the escalator on fuel duty.
And importantly, growth needs to be sustainable across the regions. And in the UK we are actually achieving that.
The figures bear this out.
Growth 바카라 사이트 positive across all regions, rising highest in the north-west and Wales, and above average in the north-east and west-midlands. Business activity 바카라 사이트 increasing in all regions, with the strongest rise in the north-east.
Employment 바카라 사이트 rising fastest in the north-east, yorkshire and the humber. In the north, for every one job lost in the public sector, over 3 have been created in the private sector.
Far from leaving people behind, we바카라 사이트re rebalancing the economy.
I was in Birmingham just a couple of weeks ago 바카라 사이트 and I saw a city which was confident and at ease with itself. A city which, according to Deutsche Bank, has such a 바카라 사이트a superb talent pool바카라 사이트 that they바카라 사이트ve opened a trading floor there.
We shouldn바카라 사이트t do down our regions 바카라 사이트 we should be celebrating their achievements.
Sustainable growth makes life better for everyone 바카라 사이트 and I was proud to hear Christine Lagarde praise the way we have gone about economic recovery: 바카라 사이트growth that is more inclusive, that is better shared바카라 사이트¦ that is also sustainable and more balanced.바카라 사이트
But there is more to do. Tackling inequality, and helping the most vulnerable, is a moral imperative.
To quote our first speaker, the Archbishop of Canterbury, 바카라 사이트no individual can safely be left behind바카라 사이트.
So, how do we continue this work through 바카라 사이트financial inclusion바카라 사이트 policies?
Well I think the way that financial inclusion works needs to be twofold. It has to enable, and it has to empower.
Enable: means making sure that people have the tools to manage and save their money using services such as bank accounts.
Empower: means equipping people with the skills and knowledge to make the right financial decisions.
You have to have both.
So the starting point is the enabling - making sure that the most financially excluded have access to banking facilities, such as basic bank accounts.
And on 15 December last year, this government secured a landmark deal with the major banks on basic bank accounts 바카라 사이트 one which would end fees for failed payments as well as ensuring access to banking facilities.
For the first time, basic bank accounts will be truly fee-free, helping people to manage their money without fear of running up an overdraft.
Accounts will be available to anyone who doesn바카라 사이트t already have a bank account or who can바카라 사이트t use their existing account due to financial difficulty.
Independent research published last year showed that there were around 1.9 million individual adults in the UK who were without a bank account.
So we held extensive negotiations with the banking industry to bring basic bank accounts up to scratch.
And the result that the nine major high street banks and building societies, covering over 90% of the UK current account market, have agreed to offer a better deal to customers.
These changes will minimise the risk that basic bank account customers will be forced into overdraft by fees or charges.
In some cases at the moment, charges can be as high as Β£35 per failed item, and uncapped, meaning charges risked accumulating to hundreds of pounds over time, driving people into serious debt, or into being unable to use their bank account at all.
Basic bank account customers will in future also be offered services on the same terms as other personal current accounts that banks provide.
That includes access to all the standard over-the-counter services and access to the entire ATM network.
And, crucially, it allows individuals eligible for Universal Credit 바카라 사이트 which has to be claimed online and paid into a bank account 바카라 사이트 to have access to their benefits.
Once you have a bank account, and are able to begin managing your finances, there are other issues which automatically become important to you.
That includes physical access to banking 바카라 사이트 having a branch or a free-to-use ATM available near to where you work or live.
I appreciate that all banks will need to balance customer interests, market competition and other commercial factors when considering their branch and ATM strategy.
This is why in October, I chaired a roundtable with senior representatives from UK banks and building societies. I challenged them to explore how to improve access to banking services for customers.
We had a positive discussion, which looked at providing greater support to those in short-term financial difficulty, and what greater functions ATMs could provide over and above cash withdrawals and balance inquiry services.
We also looked at how to increase awareness of the services provided through the Post Office바카라 사이트s extensive network, which ensure that essential banking facilities remain available in as many communities as possible.
Customers can actually withdraw money, deposit cash and cheques and check balances at all 11,500 Post Office branches in the UK 바카라 사이트 so that바카라 사이트s worth making known more widely.
I바카라 사이트ve continued the conversation since that meeting 바카라 사이트 and I바카라 사이트m continuing to push for positive action in this area.
On ATM provision, too, we are making progress. It was 44 years ago that the Enfield Town branch of Barclays Bank opened the first ever automated cash machine in the world 바카라 사이트 another first for the British retail banking industry!
The number of free-to-use ATMs is at an all-time high 바카라 사이트 with 97% of withdrawals being made free of charge. But I know that it is often the most isolated or disadvantaged communities which have the worst access to free-to-use ATMs.
So the government is working closely with the LINK Network바카라 사이트s financial inclusion programme to subsidise free-to-use cashpoints in over 1,400 remote and deprived areas across the UK. And importantly, members of the public can nominate their area for inclusion too.
But bank accounts are of course only one of several ways of furthering financial inclusion.
Credit unions already play a key role in providing financial services to more than a million customers across Britain. They can help provide access to sustainable credit and savings facilities for the financially excluded. UK membership is growing, and many of these new members come from lower income groups.
The 바카라 사이트 wants to promote credit unions 바카라 사이트 not just as a provider of financial services but also to further competition and choice across the personal banking sector.
Credit unions are not only for the most vulnerable. They are a resource which all members of their community can use.
In Ireland, credit union market penetration is at 73% and at 45% in the United States, showing that they have the potential to be a mass market alternative for savings and loans.
We want to see credit unions 바카라 사이트 like other mutuals 바카라 사이트 go from strength to strength. That is part of promoting diversity, and competition, in the financial services sector.
So, last summer, we issued a call for evidence on credit unions - seeking views about their future, and how the 바카라 사이트 can do more to support the development of the credit union movement.
The response to that Call for Evidence has now been published.
We will use the responses received when considering legislative amendments to be pursued in the next parliament. We will also ensure that the regulators are using this evidence when they review the credit union sourcebook.
And we have committed to ensuring all credit unions are engaged in the credit union expansion project as it begins to deliver more products.
But it is not just government that can help support the sector. Lloyds, Barclays and Citibank have pledged over Β£5 million in total to the sector, and I would like to thank them for this support.
One other significant area where the 바카라 사이트 has been taken action is on remittances 바카라 사이트 that is, money being sent from people living in the UK to family and friends in developing countries.
This has a huge impact on international development. For instance, approximately half of Somalia바카라 사이트s gross national income comes from remittances from overseas.
So we are doing everything we can to ensure that the Β£15 billion the UK sends out every year continues to flow through accessible and secure channels.
And through the Payment Systems Regulator, which comes into full force this April, we are promoting effective competition and innovation, and ensuring that the customer comes first.
And my department 바카라 사이트 the Treasury 바카라 사이트 is working with industry on issues relating to security and money laundering to ensure that those who need access to these services are able to get them.
I would like to turn now to financial education 바카라 사이트 how we empower people to make the most of these tools, and how we ensure that our future generations are financially literate.
Because financial exclusion particularly affects the young.
So educational initiatives can not only help solve the problem now, but prevent it in the future.
And this government has made huge progress on that agenda.
In September 2014, we made financial literacy a compulsory part of the national curriculum.
As part of the citizenship course for 11 to 16 year olds, pupils learn about the importance of budgeting, sound management of money, credit and debt, as well as understanding different financial services and products.
And the new, more challenging mathematics GCSE will ask pupils to solve problems using financial mathematics.
But I read a startling statistic in a research paper the other day.
Did you know that most children have formed their financial habits 바카라 사이트 good or bad 바카라 사이트 by the age of 7?
It make sense. Thinking of my children, you can certainly see how young people are exposed to financial decisions earlier than ever.
So we need to begin early.
You have already heard a little about the LifeSavers project, which was established by the Archbishop of Canterbury바카라 사이트s Credit Union Taskforce.
This will seek to equip primary school children with good financial habits by educating them about the benefits of saving at an early age. It will also introduce children to credit unions.
This is a hugely valuable programme. It will help tackle the root cause of money problems, and get future generations developing good savings habits as early as possible.
As part of the call for evidence on credit unions I referred to a few moments ago, I was delighted to announce that the 바카라 사이트 has committed to fund the pilot of this project form LIBOR fines.
And I am also pleased that we have begun to see more and more organisations 바카라 사이트 in particular, in the building society sector 바카라 사이트 reach out to schools with programmes of financial education.
It is something which will stand our children in good stead for later life, when they think about loans, mortgages and pension pots바카라 사이트¦
And, I hope, something which will make people think twice before contacting the payday lender.
I바카라 사이트d like to say a few brief words on that topic 바카라 사이트 because I know that payday loans are a concern to many.
I recognise that in some circumstances short-term loans provide a service to people who are in need of quick funds. That is a fact of life.
But customers need to be protected from poor or even predatory practice in these markets, which is why we have fundamentally reformed the regulation of consumer credit to deliver a market which help meet customers바카라 사이트 needs.
Last year, we transferred responsibility for regulating consumer credit from the Office of Fair Trading (OFT) to the Financial Conduct Authority (FCA), a new, more powerful regulator.
The FCA has introduced tough new rules in both the payday and debt management sectors to improve consumer protection. And it has far greater powers than the OFT did to punish breaches of these rules.
In addition, we have passed legislation which places a duty on the FCA to cap the total cost of payday loans. This came into force on the second of January. Protecting customers from unfair and exorbitant costs.
So that is what we have achieved so far. But what about the future?
Because once you have that first bank account바카라 사이트¦
Once you start using it to manage your income and your expenditure바카라 사이트¦
And once you learn more about what you can use that account for바카라 사이트¦
Then the opportunities open up.
You save 바카라 사이트 a little bit at a time. You might then invest. You might even start a small business.
And you will expect your bank to help you achieve those ambitions.
As City Minister, I have been determined to inject choice and competition into the retail banking sector.
The knowledge that you can switch accounts, and that you are the customer, is to my mind an absolutely integral element of financial inclusion.
No, you don바카라 사이트t have to be grateful to the bank for allowing you to have an account.
For too long, I think many people saw who they banked with as something they could not change 바카라 사이트 more like a blood group than a consumer product.
That mind-set was bad for competition, bad for innovation 바카라 사이트 and therefore bad for customers and for the wider economy.
This is why we attached such importance to reforming the sector, allowing new and smaller banks to enter the market and compete for customers, and putting competition at the heart of the regulatory regime.
And this is why, in 2013, we made it easier for customers to move between banks.
The current account switch service increased switching by 22 per cent over its first year.
This is important, because it provides the strongest incentive of all for banks to harness new technology and make life better for the customer.
Now I should say a word here about the point of financial technology.
It is designed to make life easier for the customer.
To eliminate bureaucracy.
To stop unnecessary complications.
To save time.
In other words, to respond to, and to meet, the customer바카라 사이트s needs.
We can, I바카라 사이트m afraid, get a little dazzled by the 바카라 사이트brave new world바카라 사이트 and forget this fundamental point.
So 바카라 사이트 to pick an example out of thin air 바카라 사이트 if a customer, maybe a vulnerable customer, has difficulties managing their debt바카라 사이트¦
They ring up, and are made to go through the maze of an automated phone answering system바카라 사이트¦
And then they have to listen to soft jazz for 20 minutes바카라 사이트¦
And finally 바카라 사이트 and remember, they바카라 사이트re ringing off their mobile phone 바카라 사이트 they바카라 사이트re told they바카라 사이트re through to the wrong line, and to try another number바카라 사이트¦
Is that going to make them more or less likely to get in control of their spending?
I would say that is a classic example of financial exclusion.
But when financial technology is designed in a way which really works for the customer, the results can be impressive.
For example바카라 사이트¦
Since April 2014, customers can securely transfer money instantly to other bank accounts using only their mobile phone number as identification. Which means you don바카라 사이트t have to have access to a computer, or travel to a branch.
And from 31 July 2016, customers will be able to use their phone to photograph cheques for payment into their bank account 바카라 사이트 making life easier for customers in remote areas.
Looking further ahead, digital currencies are set to change not only how we pay and access money, but the way that the entire financial system operates.
We are examining, through a call for information, on how we can support the growth of this extra-innovative sector.
The possibilities are endless. The rise of financial technology should excite us all. And we will be looking with particular interest at the innovative ways this technology is being used elsewhere in the world to improve financial inclusion. .
The challenge will be working together 바카라 사이트 government, industry and the third sector 바카라 사이트 to get positive, pragmatic changes in place.
I am confident that great things lie ahead.
Thank you.