Financial Inclusion amongst New Migrants in Northern Ireland - ICAR

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10Financial Inclusion amongst New Migrants in Northen Irelandpractical money advice initiative and Chapter 4below reports on this and gives a guide to whatworks when providing money advice to migrantgroups.2.3 Financial InclusionUK wide financial inclusion policy was introducedunder the previous Labour administration as aresponse to a perceived policy need to tacklewider social exclusion. The UK policy implementedby the Labour government in 2007 had the overallaim that:‘.. everyone should be able to manage their moneyeffectively and securely, through both havingaccess to a bank account and the confidence andability to get the most from it.’ (HM Treasury, 2007:11)This can be divided into two policy aims: accessto a bank account and having the education(capability) needed to use it effectively.2.3.1 Access to a bankaccountOne of the major issues that has been addressedby government policy has been to get as manypeople as possible to have access to at leasta basic bank account so that they can accessfinancial services such as the use of direct debitsto pay for bills and the ability to pay welfarebenefits electronically.The drive to get more UK citizens to hold basicbank accounts has been seen as a success forfinancial inclusion policy with only 900,000 nownot having access to a bank account of anykind in 2007/8 compared to 2 million in 2002/03.According to British Bankers Association statistics500,000 basic bank accounts are opened eachyear and in addition around 500,000 basic bankaccounts have been upgraded to fully featuredaccounts since 2003 (BBA, 2009).An IPSOS-MORI survey conducted for theConsumer Council in Northern Ireland found that:‘Eight per cent of consumers in Northern Ireland donot have a current account or a savings account.This is four times the average of the “unbanked”adults in the United Kingdom (two per cent).(Consumer Council, 2010)The same report states that “The percentage ofconsumers with a current account has increasedover the last ten years, from 68 per cent in 2000to 89 per cent in 2010. However, the figure forsavings accounts has decreased over the last tenyears, from 52 per cent in 2000 to 34 per cent in2010” (Consumer Council 2010: 27). However,merely having access to a basic bank accountdoes not guarantee financial inclusion and manypeople, especially those on low incomes are stillhaving to rely on expensive door stop lenders,paying for goods and services with cash and nothaving access to the more widely used servicessuch as payment cards which are taken forgranted amongst people with current style bankaccounts.2.3.2 New Migrant access to abank accountFor a new migrant, a basic bank account is oftenthe first step on the ladder to becoming financiallyincluded in the UK. New migrants clearly come tothe UK with a wide range of credit and financialhistories. For some it may be the first time thatthey have come into contact with a formal financialinstitution (see Datta, 2007), others may be holdersof multiple bank accounts in their home countriesand have extensive experience of negotiating thefinancial system.However, even though there are now transnationalbanking institutions such as HSBC and Santander,all countries have slightly different financialregulations and new migrants will have to negotiatethese to gain access to the system. In the UK,money laundering regulations, for example, putparticular emphasis on identification requirementswhich can make opening even a basic bankaccount difficult for those in multiple occupationhousing (a large number of new migrants will be insuch housing) and with no bills in their own names.Most migrants will overcome these hurdles as theysettle into the UK, however the hurdle mentionedmost in this research and others (Mawhinney2009, Atkinson 2006 and Datta 2007) that is muchmore difficult to overcome is the language barrier.For those migrants who come to the UK withlittle or no English skills opening a bank accountis achievable providing they have the correctdocumentation, but understanding what thataccount can offer them is difficult.This research found that migrants in this groupturned to friends, colleagues or local culturalgroups for help in opening accounts and attendingto immediate problems, but had little knowledge ofthe type of account that they had or what it could
Report by ICAR in collaboration with Citizens Advice Belfast 11do for them. As these migrants settle into life inthe UK and become eligible for a current accountwhich has the potential to offer more financialservices as well as access to credit and savingsaccounts, their potential to understand theireligibility to move forward in their financial affairs isvitally important. Many commentators have arguedthat merely having access to a basic bank accountdoes little to financially include a person in the longterm. Khan, for example, argues that basic bankaccounts may lead to people being ‘underbanked’instead of ‘unbanked’ and claims that;“Basic bank accounts are a good first step, butit is also important to consider how to encourageor incentivise people to upgrade these accounts”(Khan 2008:26).Learning to speak English is often a long andprotracted process especially for those migrantswho are working 6 day weeks and who are living inmultiple occupancy housing with fellow migrantsspeaking their national language. This languagebarrier is then likely to prevail for a long time afterthe migrant has arrived in the UK. Even whennew migrants do enter the UK with a high levelof English language skills the different system ofbanking and the different terminology may make ithard for them to understand their bank accounts.As Atkinson points out, even those who have anexcellent command in English can feel unconfidentin talking about financial concerns (Atkinson 2007).The language barrier may be further protracted forthose migrants living in rural areas with little accessto or choice of banks which are likely to only beopen during the working day. (See ConsumerCouncil 2010). There is little research evidenceof migrants use of internet banking which has thepotential to overcome some of these barriers andfurther work is needed in this area to investigatethe potential of internet banking for migrant groups.In summary, as Rahim et al. point out:‘... the vast majority of new migrants in the UKhave low incomes and are more vulnerable tofinancial exclusion because they face difficultiesin accessing and using financial services that aredue to supply and demand factors.’ (Rahim et al2009:7).These supply and demand factors can be listed asshown in Table 1 at the top of the next column onthis page.Supply SidePoor physical access tobanksLack of suitableproducts that meetmigrant needsStrict identificationrequirementsFailure to translateinformation into differentlanguagesDiscriminationHigh bank chargesUnsuitable bankingservice hoursDemand SideDistrust of banksPreference for informalfinancial arrangementsLow previous use offinancial servicesLow levels of financialliteracyDifficulty inunderstanding EnglishExperiences of andexpectations ofdiscriminationCountry of origin/ethnicity2.3.3 Financial educationThe policy for financial education of consumers isset out in ‘Financial Capability: the GovernmentsLong Term Approach’ which was published in2007. Rahim et al. (2009: 37) point out that thedocument sets out three long term aspirationswhich are that:• All adults in the UK have access to high qualitygeneric financial advice to help them engagewith their financial affairs and make effectivedecisions about their money• All children and young people have accessto a planned and coherent programme ofpersonal finance education• A range of government programmes isfocussed upon improving financial capability,particularly to help those who are mostvulnerable to the consequences of poorfinancial decisions.This has led to a range of policies including a £6million fund in 2007 for the then Learning and SkillsCouncil to pilot money advice outreach servicesand a range of initiatives across other governmentdepartments aiming to educate specific groupsof people in financial management. In 2003the Financial Services Authority launched their‘National Strategy for Financial Capability’ whichstates that:
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Financial Inclusion amongst New Migrants in Northern Ireland - ICAR

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