‘It’s people on low incomes who’ll pay for financial services deregulation’

“The time I was at my lowest was when I needed childcare over the summer. On a low income you have nothing to spare, when bills come you do whatever you can, even when it’s detrimental to the future.

When I moved from working part-time to full-time, I needed to find £1,200 to cover childcare. My high interest credit cards have very low limits and were almost maxed out, I couldn’t get an overdraft or loan with the bank, the only loan I had a chance of getting was over 50% interest. 

It felt like everything was working against me. I was crying every day, I felt trapped, the stress of being turned down at every avenue made me feel like I was going to lose my job because I couldn’t get childcare. 

I ended up not paying essential bills and taking out another credit card. Three years later, I am still paying this off. Every time I make a small dent something breaks. I am aware it is a trap.

If I could have gained credit at a reasonable rate I feel like I could have paid it off. Instead, I am only paying off interest. 

I spend countless hours trying to find a way out of this situation. Something needs to be done – most of us are struggling and plunging further into debt with the cost of living. We shouldn’t be relying on companies who exploit our situation to make more profits”. 

Jo works in finance full-time and is a single parent to a 10-year-old. 

Jo’s story is not unusual.

When you have to turn to expensive borrowing options, as is the case for so many on lower incomes, borrowing the same amount can cost you around £178 more a year. This is not about being careless with money. It is what happens when the market charges you extra when you have less and, as Jo found, closes every affordable door at the exact moment you need one to open.

And it isn’t only credit. Car insurance costs more if you live in a poorer area, so the very places we are promising “good growth in every postcode” are often the ones paying the most just to get by. One in four people in the UK have low financial resilience. This is not bad luck or bad budgeting. It is what happens when markets are left to work fine for people with money and badly for everyone else.

The Burnham government is working to give people breathing space, and that effort is needed and welcome. But putting money back into people’s pockets will not help those who have the least if we let unfair markets quietly take it out.

READ MORE: The politics of starting with the problem

This is why the Financial Services and Markets Bill, currently making its way through Parliament, matters. It looks technical and largely procedural, but it will change the way people like Jo are considered when financial markets make decisions. At the moment, the FCA, the regulator whose job is to keep our financial system working, must stop and consider the people being shut out whenever it makes or enforces rules. This duty, that they “have regard” to financial inclusion, applies whenever the regulator acts. The Bill will allow it to only be considered when top-level strategic decisions are made.

On its own, the duty as it has existed up until now would not have got Jo an affordable loan. But watering it down signals something bigger – that we are willing to step back from protections built to keep people who have less in mind, at exactly the moment they are struggling most to stay afloat.

Become a friend of LabourList and join our community. Our friends support our vital non-factional work and get access to exclusive content and events. 

The Prime Minister says he wants to ease the cost of living and stamp out rip-offs. His measures so far will give breathing space to millions buried under rising costs and stagnant incomes. But that progress could be undone if we deregulate financial services at the same time. 

The ‘deregulation for growth’ approach must be swapped for a ‘good regulation for growth’ one. Closing the gap in financial inclusion could add over £6 billion a year to the economy, and we only close it by regulating markets to put excluded people first. Financial inclusion doesn’t halt growth. It ensures growth reaches everyone.

Jo was left paying the price for a system that was never built with her in mind. It did not have to be this way. There is little point in handing people a few hundred pounds if the market is left free to charge them more than that just to borrow, to insure a car, to get through the month. A government serious about the cost of living must look at how financial markets are ripping people off. Otherwise, the people who can least afford it will continue to pay the price.

Subscribe here to our daily newsletter roundup of Labour news, analysis and comment– and follow us on TikTok, Bluesky, WhatsApp, X and Facebook. You can also write to our editor to share your thoughts on our stories and share your own. The best letters are published every Sunday.

• • SHARE: If you have anything to share that we should be looking into or publishing about this story – or any other topic involving Labour– contact us (strictly anonymously if you wish) at [email protected].
  • SUBSCRIBE: Sign up to LabourList’s morning email here for the best briefing on everything Labour, every weekday morning.
  • BECOME A FRIEND: If you enjoyed this, why not consider becoming a Friend of LabourList? Help sustain our journalism, and of course Friends do get benefits…
  • PARTNER: If you or your organisation might be interested in partnering with us on sponsored events or projects, email [email protected].
  • ADVERTISE: If your organisation would like to advertise or run sponsored pieces on LabourList‘s daily newsletter or website, contact our exclusive ad partners Total Politics at [email protected].