Financial exclusion grows
A research study conducted by the Centre for Social Impact (CSI) has found that nearly 3 million Australians lack access to fundamental financial services.
Funded by the NAB, the Measuring Financial Exclusion in Australia report measures the lack of access to appropriate and affordable financial services and products, such as bank accounts, insurance and a ‘moderate amount of credit,'
In an alarming finding, the report shows that 17.2 per cent of the population are considered severely or fully financially excluded from affordable financial services.
“Financial inclusion has an obvious and invaluable social impact, but there is also a very strong economic case, like greater workforce participation, reduced welfare and health costs, that validate and confirm its importance,” NAB Group CEO Cameron Clyne said.
In a country with a banking system and economy as strong as ours, it is simply unacceptable that nearly three million Australians are financially excluded from affordable financial services.”
The report identified the following factors contributing to financial exclusion:
- Cost: The cost of motor vehicle and home insurance has increased at a rate higher than inflation, bringing the average premium up to $898 (compared to $855 last year). When combined with the annual cost of a credit card ($808 average) and basic bank account ($88), this represents 15% of the income for 12.7% of the country’s population.
- Demographics: Indigenous Australians, young adult Australians, and those living in low-income outer suburban and regional areas are cited as some of the most vulnerable to financial exclusion. 43.1% of Aboriginal or Torres Straight Islanders (ATSI) are considered financially excluded. 49.2% of 18-24 year olds are now considered financially excluded.
- Language and documents:Communication difficulties and a lack of appropriate identification documentation were also cited as key barriers to credit. Most study respondents seeking credit did so to cover basic household necessities, such as food, rent and utility bills.
The full report can be found here