Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the adequacy of the availability of access to lower cost credit through (a) credit unions, (b) Community Development Finance Institution and (c) other community lenders.

The government believes that credit, when provided responsibly and affordably, can be a useful financial tool to smooth income and manage unexpected costs, and that there is a strong case for building the provision of such credit, particularly for underserved groups. The government is committed to taking steps to widen access to affordable credit, including by credit unions and community development finance institutions (CDFIs), and is overseeing a number of initiatives to support this goal.

Since 2019, the government has made £100 million of dormant assets funding available to Fair4All Finance to support their work on financial inclusion, and an additional £45 million for initiatives to tackle the elevated cost of living. This includes a package of tailored support to sustainably supporting the resilience of the credit union and CDFI sectors and scale affordable credit to serve people in vulnerable circumstances.

The government has provided Fair4AllFinance with £3.8m of funding to pilot a No-interest Loans Scheme, designed for consumers in vulnerable circumstances who would benefit from affordable rather than high-cost credit. Fair4All Finance are partnering with a range of lenders to deliver this pilot, including community lenders.

As part of the Financial Services and Markets Act 2023, the government has also amended existing legislation so that credit unions in Great Britain can offer a wider range of products and services. This will help allow credit unions to grow sustainably and support their role as providers of affordable consumer credit.