Peers debating the Financial Services and Markets Bill back calls for fairer access to affordable credit, stronger community finance, and greater bank accountability. By Kay Polley
This week, the House of Lords debated the Financial Services and Markets Bill at Second Reading. For the Fair Banking for All campaign, it was an important moment.
The Bill is wide-ranging and technical, but at its heart sits a bigger question: who is our financial system really working for? During the debate, several peers raised exactly that question, highlighting the millions of people locked out of affordable credit, the small businesses struggling to access finance, and the vital role that purpose-driven institutions such as credit unions and Community Development Finance Institutions (CDFIs) can play in building a fairer financial system.
It was encouraging to hear peers from across the House reflect many of the issues that Fair Banking for All has been raising. Baroness Hyde of Bemerton spoke powerfully about the scale of the affordable credit gap, the role of credit unions and CDFIs, and the need for greater transparency and accountability around how mainstream lenders serve underserved communities. The Bishop of Manchester made a compelling case for access to fair and affordable credit as a matter of dignity, equal opportunity and participation in community life. Lord Kamall highlighted the importance of CDFIs in supporting entrepreneurs and communities who are too often overlooked by mainstream finance.
We were pleased to hear Lord Kamall talk about the brilliant work of Purple Shoots, a CDFI supporting financially excluded entrepreneurs with small loans, mentoring and practical support. And it was lovely to hear him quote Finance Innovation Lab directly, saying: “talent, ambition and entrepreneurial potential are spread across the country. Access to finance is not.”
There was also welcome recognition that the Bill’s credit union reforms, while important, should not be the end of the conversation. Credit unions and CDFIs are already providing trusted, relationship-based finance to people and businesses that mainstream lenders often do not reach. But they remain too small relative to the scale of need, and partnerships between mainstream banks and community finance providers are still too inconsistent.
That is why the Fair Banking for All Campaign is calling for greater transparency and accountability in how mainstream lenders serve underserved households, communities and SMEs. At the moment, there is no clear framework for assessing whether banks are meeting these needs, or for encouraging stronger partnerships with credit unions and CDFIs.
Baroness Kramer used the debate to thank the Fair Banking for All Campaign and signal her intention to bring forward a rating system to show where there are shortfalls in lending and other financial services. We are now working with her on a potential amendment to the Bill that would create a framework for assessing and reporting on how effectively mainstream lenders are supporting access to affordable credit, including through collaborations with purpose-driven finance providers.
This is not about “bank bashing”. Banks are a vital part of the UK economy, and many are already doing positive work. But good practice is not yet consistent or transparent enough. A fair banking framework would help identify where progress is being made, where gaps remain, and how mainstream finance can work more effectively with community finance providers.
The Government has framed the Financial Services Bill around growth and modernisation. These are important objectives. But growth must be judged by who benefits from it. A financial system that helps more households access affordable credit, supports more small businesses to grow, reduces reliance on high-cost and illegal lending, and strengthens community finance is not just fairer. It is stronger, more resilient and better able to support sustainable and inclusive economic growth.
The debate showed that these issues are now firmly on the parliamentary agenda. As the Bill moves into Committee stage, the Fair Banking for All Campaign will continue working with peers, coalition partners and communities affected by financial exclusion to make the case for a stronger, fairer financial system.
*Parts of this blog were edited using AI software