The National Lottery will help fund a new initiative designed to help financially-excluded people in the UK access financial products and to help them manage their money more effectively. The ‘Improving Financial Confidence’ project will work alongside the voluntary sector and social housing providers across the country to help financially-excluded people avoid going into debt.

Improving access to bank accounts and loans for people on benefits

The £30 million fund has been set up by the National Lottery in order to support the ‘Improving Financial Confidence’ scheme. Initially, 69 local authority areas will be targeted as these have been found to have the highest levels of financial exclusion. The aim is to help people who have previously been excluded from financial services to access products and financial solutions to help them manage their money better.

The Big Lottery Fund will manage the scheme and grants of between £500,000 and £1m will be made available for projects over a three to five year term.

Sanjay Dighe, chair of the Big Lottery Fund’s England committee, said: “The current period of economic stress has highlighted the divide between those who have access to a range of financial products, services and good quality advice, and those who are financially excluded.

“Many people are unable to access or use basic financial services and products such as bank accounts, contents insurance, credit cards or affordable loans and instead fall into a trap of using high cost doorstep lenders, getting themselves into a debt spiral.

“This can make it difficult for people to manage their money, cope with financial pressures and plan for the future. It can also mean that everyday things such as household bills become more expensive.”

Improving access to car, debt consolidation and wedding loans for people with bad credit

Many people who are financially excluded end up in a spiral of debt and can often end up with black marks on their credit history, such as defaults or even County Court Judgments (CCJs). This makes it hard to obtain credit in the future.

While there are many lenders that do offer car, debt consolidation or wedding loans for people with bad credit, many of these products are not accessible by the people that the ‘Improving Financial Confidence’ scheme is designed to help.

The scheme will help people access contents insurance, basic bank accounts and credit cards as well as helping people access a loan repayment calculator in order to determine what loans are affordable to them.

The initiative is particularly targeting young people in social housing as well as people who are tenants in social housing for the first time. These people frequently lack the skills and confidence necessary to engage with the financial products that are on the market and, for example, may struggle to use a loan repayment calculator or understand the charging structure on loans for people with benefits. The ‘Improving Financial Confidence’ scheme aims to help these people improve their knowledge to avoid debt problems now and in the future.