Episode #15
Is Affordable Lending the Impact Investment We're Overlooking?
What if millions of people excluded from mainstream credit are not actually "bad borrowers", but people being assessed by the wrong system? In this episode, Salad Money CEO Craig Pennington and Ethex's Jeroen Huysinga explore how Open Banking is changing affordability decisions and ask whether funding fairer credit could represent a genuine social impact investment opportunity. Around 20 million adults in the UK are underserved or excluded by mainstream credit, but does that necessarily mean they cannot afford to borrow, or does it expose a weakness in the way our financial system decides who is creditworthy?` Craig explains why conventional credit scores can provide an incomplete picture of someone's financial circumstances, particularly for renters, people with thin credit histories and those whose financial position has changed. Salad takes a different approach, using permissioned Open Banking information to assess current income, expenditure and affordability rather than relying primarily on a historic credit score. The conversation also explores an important part of responsible lending that is easily overlooked: knowing when not to lend. Craig discusses Salad's approach to identifying financial vulnerability, signposting applicants towards organisations such as StepChange and providing access to other forms of support. Jeroen explains why Ethex sees affordable finance as a form of direct social impact investment, how it assesses potential investees and why relatively small amounts of junior capital can help organisations such as Salad unlock considerably larger pools of lending finance. For financial planners and advisers, however, impact cannot be considered separately from investment risk. The conversation examines illiquidity, the absence of FSCS protection, uncertain returns and the role these investments might, or might not, play within a suitably diversified portfolio. Ultimately, this is a conversation about what responsible capital looks like from both sides of the balance sheet, who gets access to money, who provides it and what happens when we design finance around people rather than scores. If you believe capital can play a constructive role in tackling financial exclusion, this is an episode worth hearing. If you enjoyed this conversation, follow The GoodStock Tapes wherever you listen to podcasts and leave us a review. And if this episode made you think differently about credit, financial inclusion or the way capital is allocated, share it with a financial planner, adviser or investor who believes finance can be a force for good.
