Credit score reference company Equifax UK is asking for the lending trade to unite in accelerating monetary inclusion and tackling financial abuse, in an open letter to the trade.
Drawing on evaluation from its new 2025 Monetary Well being Report, Equifax requires a collaborative effort to handle the rising challenges going through UK shoppers, together with the £20billion unclaimed advantages hole, earlier debt engagement, and the spectre of financial abuse as all in want of crucial consideration.
Constructing on the boundaries to monetary inclusion highlighted in earlier Equifax Monetary Well being Studies, it seems on the UK 5 years on from the COVID pandemic, the place £20billion of monetary assist has been left on the desk by low-income households.
In the meantime, as many as one in 5 UK girls had been victims of financial abuse within the final 12 months – a legally recognised type of home abuse regarding the management of a associate or ex-partner’s funds that causes monetary instability, dependence and penalties lengthy into the long run. This requires greatest follow throughout credit score reporting and debt decision to make sure survivors should not additional penalised. The letter calls on stakeholders to:
- Embrace initiatives like Coverage in Follow’s ‘Apply As soon as’ and the Financial Abuse Proof Type (EAEF) to assist standardise trade approaches for the higher
- Put money into monetary training to construct consciousness of points like financial abuse and unclaimed assist, serving to shoppers and colleagues on the frontline
- Critically study present approaches to transcend current expectations and assist redefine early debt engagement
- Develop and undertake progressive instruments and data-driven insights to assist financially weak shoppers
- Come collectively, throughout the trade, to innovate, set up greatest follow, share information and construct a extra inclusive monetary ecosystem match for the long run
Analysing monetary well being
Writing within the letter, Craig Tebbutt, chief technique and innovation officer at Equifax UK, mentioned: “5 years on from the worldwide pandemic, we’re seeing a fancy surroundings of resilience and vulnerability for UK shoppers, one that may profit from data-informed motion.
“We’re dedicated to working with our companions to create a sector that empowers people to stay their monetary greatest, and there are many causes for optimism, with a lot work already going down. However accelerating monetary inclusion requires a sustained dedication to innovation, collaboration, and an unwavering give attention to shopper monetary well being, and that may be a purpose that we will solely obtain as an trade.”
The decision to motion comes after Equifax launched its Monetary Well being Report, which paints a contrasting image of the monetary well being of the nation, with indicators of resilience in addition to query marks over long-term sustainability and future monetary stress.
The report discover that, whereas many shoppers are managing higher than anticipated monetary in the course of the cost-of-living disaster, whole excellent UK bank card debt climbed to surpass £70billion by the top of 2024. It additionally finds that, though the pandemic interval gave some shoppers a possibility to pay down current money owed, together with on bank cards, this development has now reversed, with general bank card debt now 4.5 per cent above pre-pandemic ranges.
With all these traits compounded by excessive inflation and chronic cost-of-living pressures, the report goes on to contemplate the prominence of Purchase Now Pay Later, with 36 per cent of shoppers utilizing it in 2024, and the way UK fiscal insurance policies might additional shift the financial panorama.
Time for coverage modifications?
Paul Heywood, chief information and analytics officer at Equifax UK, mentioned: “The soundness in shopper credit score metrics is encouraging, and at face worth, shoppers are managing their funds extra successfully than most would anticipate given the prevailing surroundings of the final two years.
“Nonetheless, it is very important think about if this resilience is widespread, whether it is sustainable, and the way sure shoppers are going through higher difficulties than others. The truth is that many are on the sting – with mortgages and financial savings decided by a fluctuating rate of interest and the choice to BNPL, it may be troublesome for shoppers to really perceive their publicity.”
Tebbutt additionally added: “As companies and shoppers frequently adapt, altering fiscal insurance policies within the UK will doubtless shift the financial panorama additional as the federal government seeks to speed up progress. We consider that information and expertise will play an enormous position in a extra equitable monetary future, and we look ahead to doing extra with our purchasers to drive innovation and higher monetary well being for the nation.”