CSFI

CSFI
Box 3: Financial exclusion and financial stress – some facts and
figures
Financially excluded people pay a ’poverty premium’ that is calculated
at up to £1,300/year. On top of that:
• an estimated two million people took out a high-cost short-term loan
in 2012;
• up to 8.8 million are over-indebted (600,000 contacted
StepChange, the debt charity, in 2015);
• an estimated 400,000 low-income households rely on “rent-to-own”
schemes;
• 13 million people do not have enough savings to support them for a
month if they were to experience a 25% cut in income;
• 50% of households in the bottom half of the income distribution do
not have home contents insurance; and
• The number of people using food banks rose from 60,000 I 2011 to
over 1 million in 2015
In summary, 15 million people are estimated to demonstrate one or
more signs of financial distress.
“In 2015, more than one third of people would be unable to find £200
at short notice; 22% would have to borrow the money or sell/pawn a
possession… These figures show a deterioration from 2014. However,
there are some positive signs for personal finances, with people cutting
back on spending, and some improvement in saving levels.” University
of Birmingham, Financial Inclusion Report, October 2015
A report from StepChange, the debt charity (Safe Harbours, January 2015), called
for a formal “breathing space” on personal debt, giving people who seek advice a
period of 12 months in which interest and charges are frozen and enforcement halted.
It argued that this would prevent temporary financial problems from becoming
entrenched. “Poor and inconsistent treatment of those struggling with debt is making
many people’s financial problems worse,” the report said. A survey of 1,800 of the
charity’s clients showed that people with debt problems were routinely being hit with
higher interest costs and other charges that make recovering from their difficulties
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