Financial Exclusion: Making the invisible visible

• Download the report „Financial exclusion: Making the invisible visible” (34 pages)

Finance Watch used surveys, interviews and workshops with 69 experts in 23 different European countries to identify the groups most vulnerable to financial exclusion, and singled out three key barriers that they face:

1. Legal requirements for access: Certain groups of people, such as migrants, are not able to provide the documents required by law as proof of their identity and place of residence. This is a particular barrier for accessing a payment account. Without it the chances of exclusion are high.
2. Financial requirements for access: Financial services are often too expensive for low income households or for those at risk of poverty. First, access to financial services often has partly hidden costs, such as a phone or internet connection. Second, the poor and vulnerable often face higher costs for financial services as they are perceived to pose a higher risk for providers.
3. Lack of required skills or means: A lack of literacy can disproportionately affect vulnerable groups. There are also serious issues over the physical abilities needed to access financial services: certain visual, hearing, physical or mental abilities are considered ‘standard’ and access may not always be possible for those that do not fit these criteria.

Based on these findings, Finance Watch presents six recommendations to increase access to financial services for vulnerable groups and so prevent financial and social exclusion:

1. allow basic payment accounts to be offered to those without full documentation, with appropriately adapted features;
2. regulate the use of credit scoring and prevent discrimination;
3. set price limits where there is evidence of indirect discrimination against poorer customers;
4. extend the EU Accessibility Act to include cash machines and other banking services;
5. ensure that a set of basic financial services and products is available to all;
6. include poverty in definitions of discrimination and equal treatment alongside gender, age, and disability to ensure an inclusive market.

Olivier Jérusalmy, Senior Research and Advocacy Officer at Finance Watch, said:

“Our study shows clearly that over the last decade the range of EU citizens and residents who struggle to access financial services has increased. This highlights the increasingly urgent need for an inclusive EU market for financial services.

We can only encourage the President of the European Commission, Ursula von der Leyen, to fully implement the European Pillar of Social Rights, if she wants to reconcile the social and the market in today’s economy. Access to essential services would improve the lives of many EU citizens and is important for a stronger and healthier economy.”