New EU study lifts lid on financial exclusion

Millions of Europeans face an increased risk of social exclusion through lack of access to basic financial services, according to a new study presented by the European Commission on the 28th May 2008. The results of the study will be discussed at a high level conference in Brussels on the 28th. The conference will bring together over 400 participants from all over Europe and the world from the financial sector, consumer groups, public authorities and NGOs to propose a series of potential policy responses. The initiative follows the Single Market Review of November 2007, where the Commission announced its intention to ensure that, by a certain date, nobody is denied access to a basic bank account.

The study on "Financial services provision and prevention of financial inclusion" presented on the 28th May 2008 provides data on the levels, causes and consequences of financial exclusion in the Member States. It also describes the diversity of policy responses developed in 14 different Member States in the field of transaction banking services, credit and savings. The study revealed that 2 in 10 adults in EU-15 and almost half in EU-10 (47%) do not have a bank account while many more have no savings and lack access to credit.

Internal Market and Services Commissioner Charlie McCreevy added: "Well functioning markets, with clear rules and strong competition are indeed strong drivers of social inclusion. They provide jobs, higher salaries, growth and opportunities. They also stimulate business to look at ways in which they might be able to profitably serve what at first may appear unprofitable niches". Mr McCreevy's comments echoed those in a recent recommendation from the Council on economic reform within Europe.

Access to financial services is key to participation in economic and social life. Yet, in the EU-15 countries, two adults in ten lack access to transaction banking facilities; around three in ten have no savings and four in ten have no credit facilities, although rather fewer (less than one in ten) report having been refused credit. In contrast, one third of people in the new Member States (EU-10) are financially excluded, more than half have no transaction account, a similar proportion have no savings and almost three quarters have no immediate access to revolving credit.

What is financial exclusion?

Access to financial services has become a necessary condition for participating in economic and social life. Financial exclusion is deeply linked to social exclusion. Poor people or socially excluded people are generally denied access to financial services and the lack of access to financial services reinforces the risk of social exclusion.