Banks called on to extend pandemic era support to vulnerable customers as cost of living pressures mount
British banks are being called on to extend support offered to customers during the pandemic as the cost of living crisis increasingly affects vulnerable customers.
A new report from Fair4All Finance – a government-backed financial inclusion body – found that “unprecedented” support from banks significantly helped customers during Covid-19 with “no detrimental impact on bottom lines”.
The report, which included research gathered in partnership with Lloyds, Natwest and Yorkshire Building Society, argued that “maintaining key Covid-19 support measures beyond the pandemic would be viable for banks and helpful for customers”.
It recommended continued use of £500 interest free overdrafts for vulnerable customers, broader use of payment deferrals for customers facing temporary difficulties and wider use of interest holidays as customers battle with the cost of living crisis.
Fair4All Finance noted that while government intervention during the pandemic, such as the furlough scheme, helped to reduce levels of loan default, “banks can continue to provide support to some customers without the need for government intervention”.
However, the report admitted that “lending support measures may be hard to sustain at large scale in the future if bad debts increase significantly”.
Discussing the report, director of conduct and credit risk at Yorkshire Building Society Simon Martin said: “With the rising cost of living causing concern, any lessons that can be learnt from the pandemic in terms of the support financial service providers offer to people in difficult circumstances can only drive positive change at a time people need it most.”
A Natwest spokesperson said: “We understand that increases in the cost of living are presenting a fresh challenge and we’re working to provide targeted support to customers and communities in need.”
A Nationwide spokesperson commented: “We know people are feeling the pressure of cost of living and this report surfaces a need to offer the right level of support to those who are struggling.
“Our cost-of-living hotline was set up to give members a quick and easy way to get in touch if they are experiencing financial worries or difficulties. Our frontline teams are spending more time with members in branch and on the phone, talking through product help, budgeting and connecting them with those who can help,” they continued.
The report also argued that the support measures boosted customer loyalty.
As a result of the pandemic measures, 76 per cent of customers surveyed said their financial position was positively affected while 73 per cent stated that loyalty to their banking institutions increased.
CEO of Fair4All Finance Sacha Romanovitch commented: “The current cost of living is creating financial pressures for millions of people. Banks have a real opportunity to offer tailored and new services to help those in financially vulnerable circumstances.
“The customer loyalty this can create is an opportunity that must not be missed,” Romanovitch added.
Lloyds was contacted for comment.