Financial Exclusion in the UK

Abstract

The US banking and financial services industry is one of the most advanced in the world. In many respects, the US is a kind of ‘pacemaker’ in financial services development for other countries. Like the UK, financial exclusion is a major issue in the US; strong Government affirmative action has been one noteworthy response in the US. In all countries experiencing and reacting to financial exclusion, the banks are seen as an indispensable and integral part of the response mechanism. At the same time, one has to be aware of the institutional context of different countries in explaining financial exclusion, its economic consequences and the appropriate policy responses. The present chapter focuses on the US and what is clear is that the rise of deregulation in financial services sectors, intensifying competition and the rise of the ‘value maximisation’ model have exposed a growing need to tackle financial exclusion. US experiences (as probably the most strongly market-orientated banking system in the world) correspond closely to those of the UK, although the approach has been more legislation based. There are also important institutional differences between the US and UK (for example, the respective roles of the post office, credit unions and Government affirmative action).