Fair Finance and RBS/NatWest hope to empower people in financial trouble.
East London ethical lender Fair Finance was born out of frustration with the failure of banks and mainstream financial organisations to meet the needs of poor and financially excluded people. So its nascent partnership with RBS/NatWest is something of a change of tack.
The social enterprise group has agreed to be part of a pilot programme to develop basic bank accounts for the bank's customers. Banks are required by the Financial Services Authority to offer 'no-frills' accounts to poorer customers, but have had little success in selling them because of the high charges that apply.
"We want a bank account that is fair to people," says Faisel Rahman, director of Fair Finance. "If you go overdrawn on a basic bank account you are charged the equivalent of an entire week's Jobseeker's Allowance. We think that is blatantly unfair. We want to work with Nat West on developing something sensible."
For RBS, the partnership makes good business sense. The bank admits that new products designed for the financially excluded have had limited appeal because the targeted customers do not feel comfortable dealing with large banks. Under the pilot programme, Fair Finance will talk people through opening an account and deliver "clean, complete applications" to the bank.
"It's a win-win," says Andrew Nicholson, head of retail marketing at RBS. "We're getting good business."
If the pilot is a success, it could lead to more bank products targeted at the financially excluded being offered through Fair Finance, such as insurance schemes, free ATMs and pre-paid debit cards. "This is the first small step to what could be a really interesting relationship," says Nicholson.