What can the UK learn from the US small dollar loans scheme and Community Reinvestment Act about expanding access to affordable credit?
The clearest lesson from the United States is that regulatory clarity — not subsidy — can unlock mainstream lending at scale. In the US, four regulators jointly issued guidance defining what was acceptable in lending of less than one thousand dollars. The result: six of the eight largest US banks began lending hundreds of millions of dollars in this space without requiring any direct government subsidy or dependence on the Community Reinvestment Act.
"You shouldn't need blood pressure medication to be attempting innovation in financial services."
— Kate Pender, Chief Executive, Fair4All FinanceKate Pender draws a direct parallel between the US Community Reinvestment Act and the UK's proposed Fair Banking Act, describing the latter as the domestic equivalent of the regulatory framework that has driven broader financial inclusion in America. Her argument is precise: what held back US banks was not unwillingness but ambiguity about what responsible small-dollar lending actually looked like. Once four regulators wrote a joint prescription clarifying acceptable practice, the market moved — without a subsidy mechanism and without relying on the formal obligations of the Community Reinvestment Act.
Pender identifies this kind of regulatory clarity as a key lever the UK has yet to fully deploy. She also points to a more immediate structural factor: changes to the fees levied on claims management companies could meaningfully shift mainstream lenders' appetite for affordable credit products. Together, these two mechanisms — clearer rules and reduced litigation risk — represent concrete, actionable steps rather than abstract policy aspirations. The full conversation with Pender, including her broader analysis of the affordable lending gap in the UK, is available on Listenly.
About Kate Pender
Kate Pender has been part of Fair4All Finance since its founding in 2019, making her one of the longest-serving figures in the organisation's development. She joined initially on a part-time secondment, leading the pilot scale-up programme that placed Fair4All's first investments into community development finance institutions and credit unions — the building blocks of the UK's affordable lending ecosystem. She then took charge of the first phase of the organisation's COVID grant programme in 2020, navigating emergency funding deployment at a moment of acute financial vulnerability for millions of people across the UK. From there, Pender moved into a permanent role before ultimately applying for and securing the Chief Executive position. Before Fair4All Finance, she built a long career in economic development, designing and running programmes aimed at helping SMEs and small businesses grow faster. That background gives her an unusually grounded perspective on what makes financial products work in practice for underserved borrowers — and why regulatory friction, not just capital scarcity, is often the binding constraint preventing mainstream lenders from entering the affordable credit market.
See also
Research published by LEK showed roughly £2 billion of unmet lending demand that could be commercially viable, compliant lending in the UK. Kate Pender explained that the community finance sector, while essential, cannot bridge this gap on its own and that mainstream lenders must be brought into the picture.
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The NILS pilot operated with a Treasury-backed guarantee covering 80% of the loan principal as a straight guarantee, with the remaining 20% covered by an additional layer. The pilot lent £10 million to 14,000 people, with bad debt rates lower than most stakeholders had expected.