Financial Inclusion: UK government’s Strategy looks to embed accessibility and support into products and services

Accessibility and customer support must be embedded into product design from day one

In the Strategy the government makes it clear that, with a view to Consumer Duty requirements, firms should be ensuring that the accessibility of products and services is ‘baked in' from the beginning of the design process and where improvements can be made, they should be. The government emphasises that the outcomes-based regulatory approach ‘gives firms the flexibility to innovate and adapt their offerings to different customer groups and circumstances' (see also the FCA's remarks on rebalancing risk outlined below).

In his related speech on 4 November, the FCA's Nikhil Rathi makes the same point on customer support, stating that financial inclusion and capability (ie customers having sufficient knowledge, confidence and support to make good decisions) now need to be connected. For firms, this means ‘embedding support into product design, not tacking it on at the end.' He stresses that, in preparation for an ‘AI-driven and automated future', the financial services ecosystem needs to ‘build skills that let people navigate products that may not even yet exist' while also reaching and (re-)engaging the financially excluded and those who have chosen to opt out.

In relation to financial inclusion, Rathi refers to the FCA's work to rebalance risk in the system ‘not just to encourage growth but because there is benefit to consumers'. For example, ‘ever more granular restrictions' may in fact ‘limit the type of innovation required to bring people into financial services.' In addition, Rathi notes that the FCA has been ‘upfront' that some of its ‘revolutionary targeted support changes' may result in worse outcomes for some, but suggests this is balanced by the potential risk that millions of consumers would face no support when making key financial decisions (see this Our Thinking article for more on the targeted support proposals).

Under the Strategy, an industry-led Inclusive Design Working Group will be established to examine where financial products and services can be made more accessible and to consider whether industry-led guidance or standards are needed. It will meet quarterly, with the first meeting in early 2026, and will report on progress to HMT every six months.

In 2026, the FCA is planning to focus on capability-by-design at key moments, plain-language explainers, and shared evaluation so that successful models can scale. Further details are expected next year.

Access to basic bank accounts needs to be increased by finding solutions to lack of standard ID

The largest banks will pilot a cross-sector solution to the persistent challenge of opening an account without standard forms of ID - a particular problem for homeless people and victim-survivors of economic abuse. It's not clear from the Strategy what form the potential non-standard ID might take. However, there is mention of the fact that firms can currently adopt a more flexible approach where standard forms of photo ID aren't available, depending on the circumstances of the applicant. The idea might therefore be to look at formalising and publicising this approach more widely.

By the end of 2025, an Identity and Verification Working Group will be convened, supported by UK Finance. Its aim will be to oversee the design and implementation of the pilot and to explore enhancements, eg improving scalability and extending the solution to other types of customers. The Working Group will report on progress to HMT every six months.

The government will also be seeking views on how its new ‘digital pass' – described as a ‘secure and privacy-preserving digital credential' - can be designed in an inclusive way to ensure that everyone who is eligible is able to access and benefit from one.

Digital exclusion needs to be tackled in support of financial inclusion

Given that digital exclusion ‘significantly undermines' financial inclusion, HMT is working closely with the Department of Science, Innovation, and Technology (DSIT) in delivery of the government's Digital Inclusion Action Plan.

The Strategy also highlights the further opportunities that the National Payments Vision presents to embed and support financial inclusion, eg in the design of the new retail payments infrastructure, the work of HMT, the FCA and the Payment Systems Regulator (PSR) on progressing the development of Open Banking-enabled variable recurring payments (VRPs), and the importance of financial inclusion to the development of the Payments Forward Plan which will contain a sequenced plan for future payments initiatives.

Mainstream lenders should consider expanding their affordable credit product offerings

Mainstream financial services firms have a greater reach than community finance providers and are often the first place where consumers go in search of credit.

The Strategy is therefore looking to help mainstream lenders potentially expand their affordable product offerings through a pilot of a small sum personal loan product (ie a fixed term product with a value of less than £1,000) in England, run by Fair4AllFinance. A mainstream lender will test the offer of small value, short term instalment loans (already standard among community finance providers) to support people's financial resilience. Fair4AllFinance are also working with the FCA to explore how the pilot can benefit from the FCA's Innovation Services and plan to apply to pilot the scheme through the regulatory sandbox. 

Lenders should consider integrating income maximisation tools into customer journeys

The government is encouraging lenders to integrate income maximisation tools (eg that allow you to check individuals' eligibility for benefits, like Universal Credit) into their customer journeys, particularly where consumers' credit needs might be met by unclaimed benefits. 

Economic abuse: action on coerced debt and joint mortgages

The three largest Credit Reference Agencies (CRAs), lenders and trade associations are working in collaboration with the third sector to develop an approach to improve the way coerced debt is reflected on the credit files of victim-survivors of economic abuse. The government is supporting this initiative and will continue to work with Surviving Economic Abuse, CRAs, creditors, and UK Finance as it develops. 

The government is also planning to work with key stakeholders, including industry and the FCA, to explore how joint mortgages are used as a tool of abuse and how support for victim-survivors can be improved.

Support financial resilience through insurance

The Strategy aims to close protection gaps and support customers who are most likely to be uninsured and vulnerable to financial loss. Fair4AllFinance, the FCA and the insurance and social housing sectors will explore together different methods of increasing contents insurance uptake for those in social housing and explore gaps in income protection products for groups who may benefit from cover. The British Insurance Brokers' Association will work with insurers on a ‘total signposting' initiative to help consumers find the right insurance product for their needs. The Association of British Insurers, the FCA and the Money and Mental Health Policy Institute will work together on guidance for the provision of travel insurance for those with pre-existing mental health conditions.

What's next?

The government plans to review implementation of the Strategy in two years' time to provide an update on progress.

Among other things, the FCA plans to continue to support firms developing products that drive inclusion through its innovation services.

How can Hogan Lovells' combined legal and consulting teams help?

Both the government and the FCA are expecting firms to address accessibility and customer support as an integral part of their product design, to be followed by a continuous improvement process. There is also some expectation of helping to future-proof customers’ financial capability, with the FCA referring to the need to ‘build skills that let people navigate products that may not even yet exist’ – quite a tall order.

Other potential changes ahead include:

• On-boarding process amendments, with the planned pilot of non-standard ID for access to basic bank accounts;
• Changes to credit customer journeys to incorporate income maximisation tools; and
• Expansion of affordable credit product offerings to include small sum personal loans.

We have significant experience in supporting financial institutions with all aspects of their business journey, including the design of new products and services and review and improvement of existing offerings and customer journeys and the related systems, processes and procedures.

The combination of our legal and consulting teams provides you with a full range of services and clear guidance on how the solutions can be applied within the business. If you would like to discuss how we can help you, please reach out to any of the people listed in this article or your usual Hogan Lovells contact.

Authored by Virginia Montgomery and Kirsten Barber.