These Programmes Help Borrowers Manage Their Every Day Finances

It doesn’t take an exceptional circumstance or life event to put financial strain on a person. For many, all it takes is putting down a deposit for childcare or repairing a car needed for work or paying for a funeral.

These are real examples of challenges that can interrupt a person’s ability to pay bills on time, causing a chain reaction of debt which, compounded by rising interest rates, can be difficult to recover from. One in seven (13%) people in the United Kingdom has no savings and one third (33%) of UK savers said they would struggle to cover a month’s worth of living expenses if they lost their primary source of income, leaving millions of adults without a financial safety net, according to a 2024 Money.co.uk report.

“It’s crucial that people have options during times of financial distress. That’s why we’re so proud to support the loan programmes run by Fair4All Finance, which give alternative solutions,” says Stephanie Mestrallet, Executive Director of Global Philanthropy at JPMorganChase.

This year, JPMorganChase committed its third grant to Fair4All Finance, a non-profit group founded in 2019. This £2.5 million grant will help certain individuals experiencing multiple debts access a consolidation loan.

When unexpected expenses crop up, many people are likely to turn to other sources of finance, such as high-cost lenders who historically have been able to charge interest rates as high as 1,000% APR . Consolidation loans can give people affordable credit alternatives in the appropriate circumstances. The loans under the Fair4AllFinance programme are offered to people with multiple, high-cost debts totalling an expected median value of £6,500 (based on the UK average value of unsecured debt). Credit unions will settle these debts directly with existing creditors, and then offer one loan at a lower rate.

Expanding Access to Credit

Fair4All Finance’s consolidation loans streamline financial management and reduce the amount that vulnerable borrowers must repay on their debts each month. A 2024 pilot programme, that will kick off later this year, has a target of issuing loans to 10,000 people over the next five years. Borrowers may be able to save as much as three hundred pounds per month, a significant amount for people who might only have £1,000 per month in disposable income. 

“These loans tend to exist for mainstream clients, but they can be difficult to get for people who are unable to access traditional banking,” Mestrallet says. “The credit unions might not have the capital to take the risk without the support of JPMorganChase.”

The consolidation loan programme is one of three that Fair4All Finance and JPMorganChase work together on to help break down barriers to credit, while also helping to improve access to economic opportunities.

An Alternative to High-Interest Loans

To help people avoid taking out high-interest loans, Fair4All Finance—with support from JPMorganChase—has offered the No Interest Personal Loan Scheme programme since 2021. The programme has issued more than 6,400 no interest loans since January 2022 with an average value of £688, takes interest payments out of the equation. Participants also receive financial coaching, and paying down the loans can help borrowers build their credit profile.

“Our hypothesis was that these consumers could afford the principal on these loans, but not the interest,” says Diana Kamil, Head of Engagement at Fair4All Finance. “And we thought if they could access those loans without interest, that could be financially transformative for them.”

One participant in the programme, Erica, used the funds to buy a tumble dryer and a bed for her autistic son, who was sharing a bed with her. “It was nice to know there was someone who actually cared about your situation,” Erica says. “My son has slept through the night. He seems a lot happier.”

Erica, meanwhile, has since started her own small business and is paying it forward by setting up a mutual aid group in her community.

“A significant benefit of the No Interest Personal Loan Scheme is to demonstrate that these consumers can pay back the loans,” Mestrallet says. “And it’s meeting that objective, with a payback rate of more than 85% to date.”

The third programme is more preventative. JPMorganChase helped Fair4All Finance fund a  searchable database of grants and government programmes. Credit unions can use this data to see if applicants qualify for free assistance. “The credit unions can see whether these people might be able to avoid taking out a loan at all,” says Claudia Rossler, Chief Customer Experience Officer at JPMorganChase.

The database has helped nearly 45,000 people find grants, with an average value of £900.

JPMorganChase’s consumer bank in the United Kingdom is also committed to supporting its customers through difficult financial situations, especially those who may be vulnerable. In January, Chase announced a new partnership with debt advice charity, StepChange, to help people get access to free, expert debt advice and recommended debt solutions.

Rossler adds, “It’s fundamental to our success as a firm that we do the right thing for our customers while helping support people in local communities build better financial resilience.”

The Potential Policy Impact

The relationship between JPMorganChase and Fair4All Finance is built on a desire to meet shared goals through innovative thinking. “JPMorganChase helped set the tone about what a good financial services partnership looks like,” Kamil says. “It’s been important for us to see that they truly have a commitment to helping people build strong financial futures across the board.”

Going forward, the two organisations hope their work will help create large-scale policy changes across the U.K. In 2023, Fair4All Finance convened the Financial Inclusion Action Group, made up of mainstream and community finance institutions as well as government representatives and regulators.

This group aims to influence government investment of The Dormant Assets Scheme Fund*, which has the potential to change the cost of credit in the U.K. The three programmes run by Fair4All Finance, and supported by JPMorganChase, will provide the data and proof points that will assist the Financial Inclusion Action Group in this goal.

“A lack of financial resilience should not be a life sentence,” Rossler says. “The U.K. government is very interested, particularly in consolidation loan services, to see whether there are some learnings that can be applied more broadly through legislation.”

Learn more about JPMorganChase’s commitment to the United Kingdom here.

^{*The Dormant Assets Scheme aims to reunite people with their financial assets, such as bank and building society accounts. Where this is not possible, the money is unlocked for important social and environmental initiatives across the UK.}