Show the Working

National Financial Inclusion Strategy

Liberal Democrat · what the evidence says

An independent, source-checked look at Liberal Democrat’s policy “National Financial Inclusion Strategy” — what it would actually do across the things that affect your life. Every claim below quotes the source behind it. How this works.

Inequality & fair shares — Helps

minor · moderate confidence

By targeting financial exclusion — which falls hardest on low-income and deprived communities — this policy would modestly narrow the gap between the richest and the rest. However, much of the agenda overlaps with existing regulatory powers and programmes already underway, limiting how much additional narrowing it achieves.

The evidence

Biggest unknown: How much additionality the strategy delivers beyond existing FCA powers, the live banking-hub rollout, and the planned Sharia-compliant finance product — if those already achieve similar outcomes, the marginal inequality effect is negligible.

Our reading: Financial exclusion is concentrated among the poorest and most geographically deprived people (E3), and exclusion from mainstream finance imposes a 'poverty premium' — higher costs for credit, insurance, and basic services — that widens the effective gap between rich and poor (E1). A national strategy that embeds financial inclusion as a regulatory duty for the FCA and PRA, expands banking hubs, broadens bank account access, and accelerates Sharia-compliant student finance would, if implemented, reduce these premiums and extend access to financial tools concentrated among higher-income groups. This has a clear inequality-narrowing direction. However, the magnitude is constrained by two factors. First, much of this agenda is already in motion: the FCA already holds consumer protection and cash-access powers (E6, E7), 350 banking hubs are already being rolled out (E21), and Sharia-compliant student finance is already legislated and timetabled (E33). The policy's stated instrument — requiring regulators to 'consider' financial inclusion — is a soft duty, not a new budget, statutory target, or structural mechanism. Second, 66% of the unbanked report being so by choice (E43), narrowing the addressable population for the bank account strand. The inequality-narrowing effect is real: even modest reductions in the poverty premium for 7+ million financially stressed adults (E2) would disproportionately benefit those at the bottom. But the additionality over existing programmes is uncertain and likely modest given the overlap with current regulatory and government activity (E30). Confidence is moderate — the direction is clear, the scale is not.

Cost of living — Mixed picture

minor · low confidence

This policy aims to help financially excluded people — like those without bank accounts or easy access to cash — afford essentials more easily, but most of its measures are either already underway or expressed as requirements to 'consider' rather than concrete spending commitments. The real-world cost-of-living benefit depends heavily on whether the strategy goes beyond existing regulatory duties.

The evidence

Biggest unknown: Whether requiring the FCA and PRA to 'consider' financial inclusion adds anything materially beyond their existing mandates and ongoing programmes — if it does not, the effect on household costs is negligible.

Our reading: The policy targets real problems — financial exclusion affects 13-14% of UK adults, is tied to poverty and deprivation, and the 'poverty premium' means excluded households pay more for essentials. Reducing exclusion would therefore have a genuine, if modest, cost-of-living benefit for the most vulnerable. However, the improvement case is substantially weakened by three factors. First, the policy's operative verb is 'consider' — there is no committed budget, statutory duty to deliver specific outcomes, or quantified target. This is a soft-verb strategy rather than a hard-instrument policy. Second, most of the named mechanisms are already in motion: the FCA has existing powers and guidance on vulnerable consumers, banking hubs are being rolled out, and cash-access powers exist under FSMA 2023. The marginal addition over business-as-usual is unclear. Third, the Sharia-compliant student finance element — which would help Muslim students access higher education without cost-of-living compromises — has been delayed since 2013 and is not expected before 2027 at the earliest; the policy does not specify a mechanism to accelerate this. On the positive side, formalising a national strategy could create accountability and coordination across regulators that currently act in parallel, and there is evidence that cash access and banking hubs genuinely help lower-income and digitally excluded households manage costs. This earns a 'mixed/minor' rather than 'negligible' verdict: there is a plausible marginal benefit for the most excluded households, but the absence of binding commitments and the overlap with existing programmes mean the real-world cost-of-living effect is likely small and slow to materialise.

Education & opportunity — Little effect

minor · low confidence

This strategy touches on Sharia-compliant student finance, which could help some Muslim students access higher education, but the vast majority of its measures focus on financial inclusion broadly (cash access, banking hubs, bank accounts) rather than education or skills. The education-relevant element has already been promised since 2013 and remains delayed.

The evidence

Biggest unknown: Whether Sharia-compliant student finance, once delivered, would meaningfully increase university participation among Muslim students or simply provide an equivalent product to those who would have enrolled anyway.

Our reading: Against O7 — education and opportunity — the policy's primary levers (cash access, banking hubs, bank account expansion, vulnerable consumer support) are financial inclusion measures that do not directly affect school standards, the attainment gap, FE/skills funding, or apprenticeship starts. They fall outside the O7 boundary. The one directly O7-relevant element is Sharia-compliant student finance. This addresses a genuine barrier: some students are deterred by interest-bearing conventional loans. However, several factors limit the verdict to negligible/minor: 1. The product has been promised since 2013 and still is not delivered — the policy restates a long-standing commitment rather than introducing a new instrument. 2. The expected launch is post-January 2027 at the earliest, making any effect long-term. 3. The product is designed to produce identical repayments to the conventional system, meaning the financial difference for borrowers is structural/faith-based rather than cost-based — uptake uplift is uncertain. 4. The policy text uses no committed budget, statutory duty, or quantified target beyond restating FCA/PRA consideration requirements — language consistent with the soft-verb caution. The counterfactual matters: the Sharia-compliant product was already enabled by the Higher Education Research Act 2017 and expected under the LLE framework. This policy's marginal addition to that trajectory is unclear. On balance, the direction edges to minor improvement for a specific sub-group of prospective students, but confidence is low given the long delay history and the structural equivalence of repayments limiting participation uplift.

Equal treatment & democratic rights — Helps

minor · low confidence

The policy tackles genuine equal-treatment gaps — most concretely for Muslim students barred in practice from conventional student loans on religious grounds, and for vulnerable or marginalised groups who face barriers opening bank accounts. However, much of the framework either formalises existing FCA duties or relies on the FCA/PRA merely 'considering' inclusion, making the additional benefit uncertain.

The evidence

Biggest unknown: Whether requiring regulators to 'consider' financial inclusion translates into enforceable equal-treatment obligations beyond the FCA's existing Vulnerable Customer Guidance and Consumer Duty, or remains aspirational.

Our reading: O9 is concerned with equal treatment, minority protections, and anti-discrimination. This policy has two clear O9 contact points. First, the Sharia-compliant student finance commitment addresses a well-documented and longstanding equal-treatment failure: students whose religious beliefs prohibit interest-bearing loans are disadvantaged relative to peers in accessing HE funding. Legislation enabling a solution has existed since 2017 but the product has not been delivered, with Parliament flagging the delay as shameful. A commitment to deliver this — even if not until after January 2027 — is a genuine step towards removing a religiously-grounded unequal barrier, which falls squarely within O9. Second, expanding bank account access matters for equal treatment because marginalised groups — those without standard ID, the homeless, those in economic-abuse situations — face disproportionate refusal rates (10% of basic account applications refused) and structural exclusion. Addressing this reduces a form of systemic unequal treatment in access to essential financial infrastructure. However, both effects are limited by two factors. First, the verb 'consider' is soft: requiring the FCA and PRA to consider financial inclusion does not create new enforceable anti-discrimination duties beyond the Consumer Duty and Vulnerable Customer Guidance already in place. The FCA already monitors access to cash, publishes guidance on vulnerable customers, and the FSMA 2023 already gave it broader cash-access powers. Much of this is formalisation rather than new protection. Second, delivery of the Sharia product is contingent on a 2027 wider reform and remains undelivered after over a decade. On balance the policy modestly improves O9 — the Sharia finance commitment and the bank account pilot address real equal-treatment gaps — but the magnitude is minor given existing regulatory frameworks already cover much of the ground and the key deliverable (Sharia finance) is delayed.

Compare all parties on inequality & fair shares →Compare all parties on cost of living →Compare all parties on education & opportunity →Compare all parties on equal treatment & democratic rights →Open this in the interactive comparison →← Show the Working home