Financial inclusion
Introduction
We want to help our residents manage their financial affairs. We have a financial inclusion policy and a financial inclusion strategy that sets out our approach to promoting financial inclusion; tackling financial exclusion and enhancing the financial capability of our residents.
Our financial inclusion policy
Magna recognises that many of its residents may be affected by financial exclusion, and that this can have a detrimental impact on day-to-day living and quality of life. Magna is committed to promoting financial inclusion, tackling financial exclusion and enhancing the financial capability of its residents.
Financial exclusion
“Financial exclusion” describes the position faced by those who are unable to access mainstream financial products, such as a bank account, savings, insurance or affordable credit.
Financial inclusion
“Financial inclusion is a state in which all people have access to appropriate, desired financial products and services in order to manage their money effectively. It is achieved by financial literacy and financial capability on the part of the consumer, and financial access on the part of product, services and suppliers” (Transact 2007).
Financial capability
Financial exclusion is likely to be linked to a lack of financial capability. Being financially capable means being able to make ends meet; keep track of personal finances; plan ahead financially; make informed choices about financial products; and stay informed about financial matters.
In implementing this policy, we will:
Establish the extent of financial exclusion among our residents
Raise awareness of sources of affordable credit, particularly by promoting the use of credit unions
Offer suitable contents insurance to our residents
Tackle fuel poverty, in accordance with our Affordable Warmth Policy
Support and promote local furniture reclaim schemes
Provide information about, and referrals to, sources of money, debt and benefits advice
Aim to maximise our residents’ income and benefits take-up
Provide information about basic bank accounts
Ensure our staff are trained and equipped to recognise financial exclusion
Keep up-to-date with latest developments and good practice.
How many people are financially excluded?
It is estimated that there are 2.8 million financially excluded people in this country, 70% of whom are housing association tenants.
2007 figures from the National Housing Federation (NHF) indicate:
16% of social rented tenants have no bank account
81% have no savings account, and 91% have no insurance cover
3 million people borrow at 164% APR and more from the home credit industry- 70% of these are social renters (Hopkins et al, 2008).
The extent of financial exclusion among our residents
The Continuous Recording System (CORE) records information on the characteristics of new housing association and local authority social housing tenants. The 2007-08 general needs lettings figures recorded 268 new MHA lettings. The records show the following about MHA tenants:
Average weekly household income was £223, compared to a national average of £198, and up from 2006/07 by 9.6%
Our average total rent and charges was £74, compared to a national average of £72, and up by 4.2% from 2006/07
Net affordability, which measures the percentage of working households paying more than 25% of their income on rent, is 22%, compared to a national average of 21% and up by 3.2% from 2006/07
Economic status of household head- 32% working full time (national average 26%); 13% working part-time (national average 9%); 7% were job seekers (national average 15%); 27% were not seeking work (national average 24%); 15% long-term sick/disabled (national average 13%); and others 7% (national average 13%).
Our STATUS Survey report, April 2008, provides the following information:
33% of respondents (compared to 31% in 2005) were employed, broken down into 12% part-time; 17% full time; and 4% self employed. 41% of tenants were retired; 2% were unemployed and available for work; and 14% permanently sick or disabled.
The most common forms of household income were earnings from state pension (44%); employment (33%); and income support (26%).
Net annual income: 15% received less than £5,199 per year (£99 per week); 48% received £5,200 - £10,399 per year (£100-£199 per week)
The majority of respondents said they currently receive housing benefit (62%); 37% said they did not; and 1% were unsure.
The “Help us to help you” questionnaires, which we distributed to all residents in 2008/09, included a question about whether the resident had access to an account with a bank, post office or building society. Of the 1844 respondents (as at April 2009), 73% had a bank account; 25% had a building society account; and 15% had a post office account. Some respondents had more than one type of account. 8.5% of respondents (156 residents) had no account at all. This is lower than the suggested national figure of 16% (see above).
Number of residents in rent arrears- at the end of April 2009, 424 current tenants had arrears of 4 weeks or more rent. However, this figure fluctuates according to when we receive 4 weekly housing benefit, which is paid in arrears.
We receive housing benefit direct from local authorities for 59% of our residents (based on February 2009). However, more residents than this will receive housing benefit, as many residents receive housing benefit paid direct to themselves. As shown above, the STATUS Survey suggests 62% of residents receive housing benefit.
Objectives of our strategy
The key objectives of our Financial Inclusion Strategy are:
to help our residents access bank accounts and sources of affordable credit, savings and insurance
to provide information and support to help prevent residents getting into financial difficulty, by maximising income and benefits take-up
to provide information, support and advice for residents who are in financial difficulty.
These objectives will help us to achieve our purpose, “to help people meet their housing and related needs and aspirations”, and the following strategic objectives:
to be excellent in our services, and always improving
to achieve value for money in the use of our resources
to be the partner of choice for the communities and others we work with.
Access to bank accounts, affordable credit, savings and insurance
We will promote and support credit unions operating in the areas where we have housing stock. We will work closely with Dorset Credit Union in particular, by providing them with office accommodation, displaying their literature in our offices and including information about the credit union at sign-up.
We will provide information about basic bank accounts, where we identify residents who have no access to a current account, and help residents to open such accounts if needed.
Since April 2009, we have been promoting “My Home”, the NHF contents insurance scheme. We promote the scheme through information provided on our website, in Opendoor and sign-up packs and by having information packs available from our offices. We will provide training for staff, to ensure they are aware of the scheme and can promote it to residents.
Information and support to prevent financial difficulty
We will tackle fuel poverty, through energy efficiency measures such as the installation of central heating, double glazing, cavity wall and loft insulation, proper insulation of hot water cylinders and pipework and the use of efficient condensing boilers. Our approach is set out in our Asset Management Strategy and our Affordable Warmth Policy. During 2009/10 we will develop an insulation policy.
We will support and promote local furniture reclaim schemes.
We will help residents to maximise their income and increase the amount of benefits claimed, through the provision of information, advice and help with claiming. In general needs and sheltered housing, we will do this through the work of the Money Matters Adviser and other staff in the Income Management team. In our supported housing, we will do this through support staff in accordance with each resident’s support plan.
Information and advice for those in financial distress
We will provide advice and information to our residents on debt, benefits and other money matters, through our website, Opendoor and in our offices. We will offer help to residents who have rent arrears and other debts with us. Since April 2009, we have been developing the role of our new Money Matters Adviser.
Partnership working
Successful partnership working is key to delivering good quality financial inclusion measures and we are committed to building upon our existing range of partnerships to support our work. We will work closely with the local authorities in those areas where we have housing, particularly the housing benefit departments; local credit unions; relevant voluntary agencies, such as the CAB and other advice providers; and with those registered social landlords and other agencies that provide support to our residents. We will attend relevant forums and other liaison meetings and events.
Resident involvement
We are committed to involving residents in the decisions that affect their homes and the schemes and/or neighbourhoods in which they live. We are committed to placing resident involvement at the heart of our financial inclusion work.
Training and equipping staff
We will ensure that we have appropriate staffing and management structures in our income management team and elsewhere, in order to deliver and monitor financial inclusion work. We will provide training for relevant staff on benefits, debt and other related matters.
Performance and satisfaction monitoring
We set targets for rent arrears in general needs, sheltered and supported housing. These targets are reviewed annually. Performance is measured against these targets and published regularly. We also set targets and measure performance of Supporting People Charge arrears and other debts. We will measure residents’ satisfaction through STATUS surveys and other surveys, as well as through formal complaints.
Equality and diversity
We are aware of the diverse needs of the wider community and will work to engage disadvantaged groups and those that are under- represented and ensure their views are taken into account in implementing our financial inclusion work. The development of this strategy will take into account the requirements of our Equality and Diversity Policy.
Value for money
Our financial inclusion strategy links with our Value for Money Strategy (2009-14) and the VFM action plan for 2009/10, which includes the action “to collect income effectively and efficiently, whilst following Magna’s strategies for financial inclusion”. Maximising our residents’ income and helping them to manage debt, along with the other work to achieve financial inclusion, is expected to have a beneficial impact on rent arrears and other debts and on the number of evictions, voids and failed tenancies. Financial inclusion work will also have a positive impact on levels of resident satisfaction.
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