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20 May 2016 Graeme Oram, Chief Executive

Brokering New Partnerships To Deliver Affordable Credit & Financial Inclusion – Investing in Prevention to Improve Life Chances. 20 May 2016 Graeme Oram, Chief Executive. Introduction. Jimmy – A Bit of a Case Study Some Context The Problem

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20 May 2016 Graeme Oram, Chief Executive

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

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

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

  4. Jimmy – A Case Study (2007) • Thanks to Five Lamps’ engagement with Jimmy we are now a leading Responsible Finance provider • We’ve made over 80000 loans totalling over £30m since 2008 • We are a lender and not an advice service, and we don’t offer a savings product • We have full Financial Conduct Authority permissions and are fully regulated • We have invested heavily in our infrastructure and in securing capital for on-lending • We want to work in partnership with local authorities, housing providers, credit unions and the advice sector • We are committed to adding real value but local partnerships typically aren’t working – so in most cases we have to do our own thing

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

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

  7. Affordable Credit

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

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

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