Current Projects 2011
The following are the main current (2011) research projects being undertaken by RUFI
1. Provision of Affordable Credit across Greater London
Santander has commissioned a research study into the delivery of affordable credit across Greater London. This was developed in collaboration with the Department of Work and Pensions, and is currently being undertaken by the Research Unit for Financial Inclusion (RUFI) and Policis, an independent research agency.
There are four central strands to the research study:
1. A mapping exercise to identify those areas of Greater London where there is a need for affordable credit.
2. Analysis of existing supply of affordable credit and identification of those areas where there is a capacity gap between existing supply and demand.
3. Analysis of the potential of existing supply to develop and grow so as to meet that demand through action research with credit unions and other stakeholders.
4. The framing of recommendations for the future strategic development of affordable credit supply in the capital.
The final report is to be launched in the House of Commons on 12th July 2011
2. An action research project aimed at responding to the needs of vulnerable and homeless people for a bank account.
Access to a bank account is regarded as essential if people are to participate fully as economic citizens within society. People need access to basic banking services to receive wages or benefits, to cash cheques, to obtain cash and to pay bills. Without a bank account, it is often significantly difficult to secure a job or a tenancy.
As research among prisoners and ex-offenders has shown (Jones 2008, 2009) denial of access to a bank account can compound even greater social exclusion and can exacerbate a range of social and psychological problems that undermine an individual’s economic wellbeing and ability to re-integrate into society.
One group that is often overlooked are vulnerable, disadvantaged and homeless people. Little attention has been paid to their need for a bank account and, consequently, not only do they self-exclude from the financial system, financial institutions and providers often lack the awareness, capacity and the will to respond effectively to them.
The Cyrenians, a charity working with homeless and vulnerable people in the North East, is working in partnership with RUFI on an action research project focused on creating an opportunity for vulnerable and homeless people to access and use a bank account. The project is to concentrate on transaction banking but inevitably lead to considerations of access to financial services more generally (e.g. money advice and financial education).
A key objective is to engage directly with a bank or other financial institution to find ways in which vulnerable and homeless people can be served with a bank account appropriate to their needs. A key outcome of the research is to resolve the problem of lack of access to banking which will be measured by the difference that project makes in the lives of the financially excluded, vulnerable and homeless individuals with whom the Cyrenians work.
The action research project is funded by the Northern Rock Foundation.
The final report is due early in 2012.
3. Treating Debtors Fairly
Cooperative Financial Services (CFS) has asked RUFI to explore how The Co-operative Bank can improve and develop the way in which they respond to borrowers who are facing financial difficulties and who are struggling or failing to keep up with repayments on loans.
CFS already has a range of traditional and standard debt collection processes and procedures in place. However, with increasing levels of over-indebtedness in society, exacerbated by the recent economic downturn, new approaches to people struggling to make loan repayments may be required.
Problem debt for CFS customers arises nowadays not so much from irresponsible lending or borrowing - credit administration procedures are already designed to ensure that people do not borrow beyond their capacity to repay. Rather problem debts increasingly arise from a range of factors associated with either changes in financial circumstances or with poor money management skills.
RUFU is currently conducting the research study into the experience of CFS customers facing financial difficulties or increasing problem indebtedness. The aim is to better inform the way CFS responds to their needs and financial situation.
The final report is due later in 2011
4. Integrating debt advice services
Research into the developmentof an integrated approach to the delivery of face-to-face and telephone debt advice among Citizens Advice Bureaux in the North East and Cumbria.
Citizens Advice Bureaux are entering a challenging time about the future of face-to-face debt advice. There has been great uncertainly over the future of the Financial Inclusion Fund debt advice project. This has now has been extended with Government funding on £27 million for another year. This is good news for Citizens Advice and for other advice agencies, but there are no guarantees that this funding will continue after March 2012. 2011will be a time in which Citizens Advice will be thinking seriously and strategically about of radically restructuring its services to meet the challenges of the future.
The need to rethink services is also compounded by the fact that local authorities are cutting back on grants to bureaux and the Legal Services Commission is reviewing the role of legal aid in supporting people to access debt advice. At the same time, the wider economic context is impacting on job security and income levels in the region, and the need for debt advice is likely to rise not lessen.
This RUFI research study is exploring the effect of this changing political and economic context on the delivery of CAB debt advice services in the North East and Cumbria and exploring the strategic development of an integrated and collaborative debt advice service which has the potential to inform national strategic policy on the development of debt advice services.
This is a Citizens Advice initiative supported by the Northern Rock Foundation
The final report will be out by the end of 2011.
5. Credit and low income consumers. A demand-side perspective on the issues for consumer protection
Anna Ellison, Claire Whyley, Rob Forster and Paul A Jones
RUFI is collaborating with Policis, the lead organisation on this research study into access to credit within low-income households.
The research study explores:
· The dynamics and drivers of credit use among low income households;
· The fit between current credit supply and the needs of low-income consumers;
· Low-income consumers’ decision-making, credit choices and credit behaviour and their impact on the outcomes of credit use; including the varying impacts of credit use for different groups of low-income consumers;
· The research will identify: the causes of and potential for consumer detriment and the issues for protection of low-income consumers in the post-crisis credit market;
· The role of social lending within wider patterns of credit use among those on low income and how far social lending represents an alternative to commercial credit use for low income borrowers
· The most effective approaches to credit regulation to optimise the balance of benefits and risks of credit use by low-income consumers
This report focuses on the mass low-income market and the use of a wide range of credit products used by low-income consumers, both mainstream and sub-prime. The report is due to be published mid-2011
