“Rural Financial Inclusion and the Challenges Involved”

Rural Financial Inclusion: Western Isles experience

Financial inclusion

What does it look like in the Western Isles?

Rural barriers

Opportunities

Western Isles – sustainable change

Issues and questions.

Rural Financial Inclusion: definition (1)

Financial exclusion can be defined as the inability of individuals, groups and communities to access and use appropriate and affordable personal, business and organisational financial products and services.

Financial exclusion can be defined as the inability of individuals, groups and communities to access and use appropriate and affordable personal, business and organisational financial products and services.

adapted from the Scottish Executive Financial Inclusion

Action Plan.

adapted from the Scottish Executive Financial Inclusion

Action Plan.

Rural Financial Inclusion: definition (2)

What this means for us in the Western Isles; seeking ways to prevent financial exclusion from arising

providing individuals and households with the advice, information and guidance needed to manage their way out of poverty and stay out

being ‘cleverer’ about the ways we get this help to people and doing so when it is most needed

ensuring access to the products and services needed to underpin financial inclusion

encouraging individuals to plan and manage their finances over the short and longer-term

providing social enterprises with the advice, support and resources required to grow and create new opportunities

… it’s not just about poverty and the poor!

Rural Financial Inclusion: what does it look like (1)

What are the conditions we seek to change – underpinning issues;

declining population – 10% since 1991; young people in particular

26% of population is over the age of 60 - 23% for Scotland; more pronounced in smaller communities

over 15% of the population recognised as ‘income deprived’

unemployment of 3.1% compared to 2.9% in Scotland

… but labour market characterised by seasonality, low income occupations and dependence on declining industries.

Rural Financial Inclusion: what does it look like (2)

What are the conditions we seek to change – higher costs;

0 5 10 15 20 25 30

clothing

housing/fuel

transport

food

% household income

UK

W. Isles

0 5 10 15 20 25 30

clothing

housing/fuel

transport

food

% household income

UK

W. Isles

Rural Financial Inclusion: what does it look like (3)

What are the conditions we seek to change – the outcomes;

the average gross weekly salary in 2005 was £380.5 - Scottish average was £411.7

average Western Isles household income during 2003 was £21,700 - Scottish average of £25,500

heavier reliance on pensions – 14% of income compared to 7% in Scotland

highest levels of fuel poverty in Scotland, 24% in 2005, more prominent in smaller communities

CAB reported over 6,000 Benefits enquiries in 2004/05 - 45% of these being Disability Benefits/Disabled Person Tax Credit constituting the single most frequent form of enquiry

Money Advice had dealt with over 2,000 enquiries, taking on almost 600 crisis debt cases with £6,000 worth of debt on average

Rural Financial Inclusion: rural barriers

choice of and access to services more limited – heightened by concern over post offices

‘specialist’ support limited – extra pressure on partners such as CAB

both above exacerbated by costs of providing services in most remote and fragile communities

local people not inclined to give information about themselves relating to finance

scale/nature of communities precludes any targeting of services at too narrowly defined social groups

financial wellbeing of young people migrating for education/work, without the support available to their mainland peers is a concern

awareness of good practice in financial inclusion in a rural setting is very limited.

Western Isles: sustainable change (1)

using resources over the next two years to lay groundwork for sustainable change.using resources over the next two years to lay groundwork for sustainable change.

Our action planning process…

Understanding the nature and characteristics of financial exclusion – people and place

Understanding the nature and characteristics of financial exclusion – people and place

Building up a picture of what where we want to be in terms of our people, our organisations and services

Building up a picture of what where we want to be in terms of our people, our organisations and services

Mapping current services – where are we strong; what are the gaps; what we can realistically change

Mapping current services – where are we strong; what are the gaps; what we can realistically change

Building a consensus around the changes we want and testing or pump-priming new approaches

Building a consensus around the changes we want and testing or pump-priming new approaches

Rural Financial Inclusion: opportunities

Western Isles has many natural advantages; extremely vibrant voluntary sector – can reach most

vulnerable groups

services know each other – although we are aware that joint working can still improve

staff involved in delivery as well as strategy – closer to clients

excellent broadband infrastructure can provide a platform for information and new services

new Credit Union central to our plans

understand and comfortable with the need for sustainable developments

Western Isles: sustainable change (2)

Enhanced Service Coordination – CAB and

Credit Union at core

Enhanced Service Coordination – CAB and

Credit Union at core

Preventative approaches – schools and young people,

tools and materials

Preventative approaches – schools and young people,

tools and materials

Targeted multi-agency awareness and take-up

campaigns

Targeted multi-agency awareness and take-up

campaigns

Support for CU to ensure a focus on

financially excluded

Support for CU to ensure a focus on

financially excluded

Supported by a Financial Awareness

Communication Strategy

Supported by a Financial Awareness

Communication Strategy

A joined-up approach – key themes:

Western Isles: sustainable change (3)

key messages; generic and client specific information channels e.g. vol sector information means e.g. broadband TV build capacity of mainstream staff e.g. health

Financial Awareness Communication Strategy

support sustainability of Credit Union develop inclusion approaches through CU assess feasibility of social enterprise CDFI

Products and Services

OutcomesOutcomes

new Credit Union accounts opened and additional savings

vulnerable clients receiving advice/information through trusted intermediaries

people living in most remote communities receiving advice and information

increased incomes.

inter-agency awareness and referrals targeted information campaigns holistic advice and guidance to clients

Service Co-ordination

Rural Financial Inclusion: issues/questions

to what extent are the conditions in the Western Isles different from more urban areas or other rural communities

we have sought to avoid targeting specific communities or groups too explicitly to avoid stigmatisation – is this the correct approach

there is still a need to target vulnerable groups and we will do this through the voluntary sector – is this achievable in other rural areas

what role might information communication technology play in the financial inclusion agenda in rural communities

we see social enterprise as a means of creating growth opportunities in a low income economy and this is part of our agenda – would you agree

what networks exist for sharing practice and learning on rural financial exclusion in Scotland and with other parts of the world?