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There are nearly 2 million adults without a bank account in the UK. Financial exclusion is not limited to the developing world and there are a significant number of people in the UK who are unable or unwilling to access basic financial services that many of us take for granted as a necessary part of everyday life. As the Financial Inclusion Commission's report concludes, financial inclusion is essential for anyone wanting to participate fully and fairly in our society.
The Commission was established to investigate the barriers to financial inclusion and to highlight its significance going into the General Election. While financial exclusion can lead to social exclusion it often hits those from disadvantaged backgrounds hardest so it is a symptom as well as a cause. As the Joseph Rowntree Foundation's report on financial inclusion highlighted, a lack of financial understanding can have a greater impact when you have no financial cushion to protect you from the effects of poor money management. The introduction of Universal Credit, personal budgets and self-management benefits will only serve to increase the incidence of poverty due to financial illiteracy.
Both the financial services industry and civil society are taking steps to address financial exclusion and financial understanding. A number of high street banks have come to an agreement with the government to provide fee-free basic bank accounts in 2015 (in line with the EU Payment Accounts Directive, which requires member states to provide access to a basic payment account from 2016).
Social businesses are at the forefront of the fight for financial inclusion. For example, MyBnk is an award-winning UK charity that works with young people to teach them how to manage their money and set up their own enterprise. It points to the fact that young people are engaging with money from an earlier age but face a financially uncertain future. Another organisation addressing financial inclusion is Fair Finance, which works to provide affordable and accessible financial products to the financially excluded and those left vulnerable to the sub-prime financial services industry. In 2010 Fair Finance secured £2 million of commercial investment to expand its operations showing that it is not only social businesses who see the opportunities in this market.