Scotcash Annual Report 2021-22 - Report - Page 7
2020-21 ANNUAL REPORT & FINANCIAL STATEMENTS
2020-21 ANNUAL REPORT & FINANCIAL STATEMENTS
The pandemic had a devastating impact on lower-income households
and their finances. Sadly, we thought it would, so early on Scotcash
set in motion a plan to support our customers.
Households with the lowest
incomes spend little on
discretionary items – most of
their spending is on essentials
– so when incomes fell as the
pandemic hit they had little room
to save money. At the same time
the cost of food, energy and other
expenses shot up for many1.
Our team could see the
consequences would be stark
for many of our borrowers,
and as Covid-19 first struck we
experienced an immediate and
significant increase in requests for
payment holidays.
Before the crisis less than five
percent of customers asked for
payment holidays at any one time.
As soon as the crisis started, we
knew people would be worried
about making their repayments
if their income had dropped or
cost of living increased. We only
make loans we are confident
customers can repay, but the
virus had changed many people’s
circumstances. We didn’t want
them to miss meals because of a
monthly payment.
The role of
affordable credit in
the pandemic
How Scotcash supported vulnerable people
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So we got in touch with all our
customers. We proactively offered
payment holidays, rather than
waiting for people to ask for them,
and we did this well before the
FCA instructed credit providers
to do so. By July around a third of
customers had taken this up.
As the strict lockdown kicked in
many people were isolated and
lonely, and lockdown meant we
could not give people face-to-face
advice. We spent a lot of time on
the telephone with customers
in April and May. A grant from
Foundation Scotland enabled
us to make hardship awards of
£50 each to 80 households, all
existing customers. We identified
eligible people by listening to
customers and through our team
pinpointing vulnerable households
which needed support. We used
flexible criteria: our only key
requirement was that customers
had been ‘impacted by the crisis’
so there were all sorts of different
circumstances: some had lost all or
some of their income; for others,
their household expenses had shot
up because they were shielding
and could only get groceries from
more expensive places than usual.
During these conversations our
staff listened to customers’ specific
circumstances and directed them
to support in their area. Many
didn’t know what help they could
get from their local council, so
they really valued us finding this
for them. We told them about our
online benefit checker tool too, and
if necessary helped people to build
their digital skills and confidence.
Alongside this person-to-person
contact with customers, we used
social media to continue spreading
the word about our “Money MOT”
tool. This was particularly helpful
for people who’d been newly
made redundant, whether or not
they were Scotcash borrowers.
They could identify any tax credits
and other relevant benefits which
had an enormous impact. By June,
use of the tool shot up with users
identifying over £26,400-worth
of benefits they were eligible
for, more than a tenfold increase
on pre-Covid times. This put
money into their pockets and
households–a lifeline at a time of
unprecedented pressure, saving
many the need to take on any debt
at all.
By October 2020 the number
of people in the UK with low
financial resilience had leaped
from 10.7 million to 14.2 million2. By
December, nearly 9 million people
had borrowed more money than
usual because of coronavirus,
with renters, people from minority
ethnic groups, parents and carers,
disabled people and those who are
shielding, and young people most
likely to have taken on more debt
since the start of the pandemic3.
Life has got harder and harder for
people, especially those with the
lowest income. Scotcash worked
hard to protect our customers from
the worst possible consequences.
1 Resolution Foundation, Pandemic Pressures, Why families on a low income are spending more during Covid-19,
https://www.resolutionfoundation.org/publications/pandemic-pressures/
2 The Financial Conduct Authority (FCA) Financial Lives survey,
https://www.fca.org.uk/publications/research/financial-lives-2020-survey-impact-coronavirus
3 House of Commons Library Research Briefing – Coronavirus: Impact on household savings and debt. Brigid Francis-Devine.
https://researchbriefings.files.parliament.uk/documents/CBP-9060/CBP-9060.pdf
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