Financial exclusion is a harsh reality not just in underdeveloped nations, but in developed countries as well. There are many factors for financial exclusion including access, financial literacy, pricing and even self-exclusion based on negative experiences with the sector. Shocking as it is, the financially excluded represent only 8% of the population in US . This compares favorably to some nations in sub-Saharan Africa, where more than 80% of the population remain financially excluded.
Governments and regulators across the world are trying hard to address financial exclusion through strong legislation, improving access, and addressing financial literacy. Here’s a look at some examples of the efforts in the US and the UK:
|Initiative||Impact||Examples of US efforts||Examples from the UK|
|Tighter regulation||Regulation can drive greater transparency, regulate pricing, and promote simplification of products in the market.||
The CARD Act in the US has removed unfair fees upwards of $16 billion.
||The Financial Conduct Authority (FCA) in the UK were able to cap the prices on payday loans to 0.8% per day.|
|Improve Financial Literacy||Better understanding of products / financial management tools||The US treasury department is also making efforts to improve the financial literacy amongst the youth through their educational site mymoney.gov.||Money Advice Service, a quasi-government agency, provides impartial advice on money matters to UK citizens pertaining to all the life situations.|
|Increased access to credit||Expanding access to finance has a positive impact on economic activity and poverty alleviation||The Community Development Financial Institutions (CDFI) Fund, part of the US Department of the Treasury, has built a network of CDFIs across the nation to provide credit and capital in underserved areas.||Credit unions in Wales provide simple financial products like savings, loans and pre-paid debit cards.|
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