Why a Fair Banking Act would create a more inclusive economy

Despite progress in some areas, millions across the UK continue to face daily barriers to accessing affordable, appropriate financial services. Recent figures suggest that around one in seven adult Scots fall into the definition of ‘financially excluded’, meaning they could potentially struggle to access affordable and fair financial services.

Whether it’s the inability to open a bank account, denied affordable credit, or enduring poor service that ignores the needs of people in vulnerable circumstances, the current system too often fails those who need it most. It’s not just individuals and households who are impacted. Businesses can also struggle to access the funds they need to start up or grow, hampering economic growth.

While the cost-of-living crisis may have seemingly passed its peak, a recent report from the debt charity Step Change Scotland tells a different story, with alarming rises in debt among its clients and record arrears on household bills.

The financial system should be a force for resilience, dignity, and opportunity, not one that entrenches disadvantage. A Fair Banking Act would help turn that principle into practice, giving financial inclusion the legal weight and policy priority it demands. It would establish minimum service standards, guarantee universal access to no-fee basic bank accounts, and require transparent reporting on how banks serve vulnerable customers. Beyond these measures, the legislation would formalise financial inclusion as a regulatory duty and embed co-design principles that ensure financial products actually work for those who need them most.

Figures from The Fair Banking for All Campaign suggests that a Fair Banking Act could lead to a thirteen-fold increase in the level of annual lending to people and businesses by responsible credit providers from an estimated £250 million per year now up to a £3.3 billion per year.

This isn't just about banking. It's about recognising that in today's economy, financial services are essential infrastructure. By removing barriers that keep millions excluded from the financial mainstream, a Fair Banking Act would reduce reliance on predatory alternatives, build community wealth, and strengthen our economic system through greater participation.

In Scotland, we’ve seen the power of partnerships and place-based innovation. Credit unions, community lenders, fintechs and the third sector are leading the way in delivering inclusive financial services, such as ethical lending, budgeting tools and financial education in schools.

But local action alone isn’t enough. Without a clear legislative and regulatory framework at UK level, these efforts remain fragmented and fragile.

The UK Government’s upcoming Financial Inclusion Strategy is a welcome step, but without enforceable commitments, timelines, and accountability, it risks being yet another policy document that fails to shift the dial.

A Fair Banking Act would anchor the strategy in law. It would send a clear message that access to fair, affordable financial services is not a ‘nice to have’, but a matter of social justice and economic resilience.

We urge the Government to be bold. To listen to communities, campaigners, and experts. To move beyond words and towards lasting, structural change. A Fair Banking Act would be a big step towards a more inclusive economy.

Sharon Macpherson, Associate, Financial Inclusion for Scotland