Why is financial inclusion important?Financial inclusion is about ensuring that everyone has access

to appropriate financial services to

• Manage their money on a day-to-day basis, effectively, securely and confidently

• Plan for the future and cope with financial pressure - protecting against short-term variations in income and expenditure, taking advantage of longer-term opportunities

• Deal effectively with financial distress, should unexpected events lead to serious difficulty

HM Treasury’s Financial Inclusion Strategy: a summary

• DTI managing £47.5 million fund for free, face-to-face money advice (400 advisers in place; 150 more to come - 18,000 customers reached)

• Legal Services Commission using £6 million to pilot methods of money advice outreach (8,000 advised)

• DWP administering £36 million Growth Fund for third sector lenders, over 15,000 affordable loans

• ‘Now let’s talk money’ campaign launched in January 2007 with £5.4 million funding

• Financial Inclusion Taskforce has a budget of £3 million for research and enhancing knowledge base

Achievements to date

• Continuing to reduce the number of unbanked people by promoting basic bank accounts

• Ensuring that newly banked people are using their bank accounts effectively

• Continuing to focus on the issue of accessibility of banking services

• Understanding the impact of developments in the banking market on the Government’s objectives for effective money management

Challenges for effective day-to-day money management

• Increasing the coverage and capacity of third sector lenders so that excluded people nationwide have access to this source of affordable credit

• Making saving work for low-income or financially excluded consumers, through products that meet their saving needs, and through targeted saving incentives

• Investigating the role of insurance as a product for financially excluded customers

• Increasing demand for financial services through targeted support, increased financial capability, and realising the potential of bank accounts as a route into wider financial inclusion

Key challenges for planning for the future and coping with pressures

• Continuing to make progress with the supply of face-to-face advice

• Establishing the potential of new, cost-effective, mechanisms for delivery of advice

• Replicating the success of DTI’s pilots to date in the nationwide rollout of projects to tackle illegal lending

• Promoting the role of banks and other financial services providers in supporting people out of financial distress

• Addressing the impact of low financial capability on people’s capacity to deal with distress

Challenges for dealing with financial distress effectively

For the next spending period (2008-11) Government will:• Establish a new Financial Inclusion Fund for new and

ongoing initiatives to promote financial inclusion, maintaining intensity of action, with the exact amount of the fund to be determined after the CSR

• Establish a ministerial working group to determine detailed priorities for financial inclusion policy, and to publish a detailed action plan after the CSR

• Extend the life-span of the independent Financial Inclusion Taskforce to evaluate progress and advise the Government

Key announcements