Neyber – written evidence (FEX0065)


Introducing Neyber:

Neyber ( was founded by former Goldman Sachs investment bankers Martin ljaha and Monica Kalia along with financial technology expert Ezechi Britton. The founders joined together to deliver a genuine alternative to the solutions offered by financial service providers whose high borrowing rates and low returns on savings have helped to create an unprecedented era of financial stress and exclusion. Neyber is an alternative consumer lending platform that operates in the employee benefit space. Since its inception in 2014 Neyber has lent in excess of £30M to key workers in the public and private sectors.

Neyber enables employees to reduce their borrowing costs with access to affordable loans with repayments taken via salary deduction - all at no cost to the employer. As Neyber’s technology integrates with payroll, employers can offer an easy-to-implement workplace financial solution that acts as a key driver for employee engagement, productivity and to reduce stress-related absenteeism.

Through its affordable rates, Neyber has delivered an effective 5% pay rise to the majority of its borrowers, by enabling them to consolidate their debts, saving them up to 20% on monthly debt repayments. Neyber provides its services across the UK in organisations ranging from SMEs to major private and public sector employers. The company began by lending to serving and retired officers in the UK Police service. Neyber will rapidly expand its presence in 2017 across the 30M strong UK employment market.

Definitions and causes of financial exclusion

  1. Is financial exclusion the inverse of financial inclusion and, if not, how do the two concepts differ? What are the causes of financial exclusion?


(i)                  We believe that the two concepts are related and do not differ. Those who are financially excluded are unable to access goods and services with convenience and at a cost that is reasonable. Those who are included are able to do so with ease. In practical terms this can result in the financially excluded paying punitive charges for their loans, water, gas, electricity, clothing and electrical goods. As a consequence the poorest individuals and communities pay a greater proportion of their incomes for basic services than those on higher incomes and are further impoverished as a result.


(ii)                The causes of financial exclusion arise from a range of demographic and regional factors within UK society. In the past, and prior to the establishment of the post-war welfare state, financial exclusion solely resulted from poverty. The poor could not afford to pay for the basic goods and services to sustain their lives and suffered grievously as a consequence. Those most on the margins were sent to the Workhouse, while millions of others subsisted on low wages in poor housing conditions.


(iii)              In modern day Britain, with a developed welfare state and free health service, the causes of financial exclusion are more intricate. The great majority of people have access to money to pay for the basic aspects of life. State support, although diminished by welfare cuts, also enables people to subsist in housing that is maintained to legislated standards. With an increasingly diverse population financial exclusion can also arise where foreign workers that move to the UK are not catered for by mainstream lenders. Traditional lenders also have insufficient information to make an informed risk based decision about an individual’s ability to repay, when they have little credit history, otherwise known as having a “thin credit file”, which results in exclusion.


(iv)              What matters most now is an individual’s inability to access the financial services that enable the great majority of people to pay for their goods and services or to borrow money at reasonable rates. This is diminished by poverty, poor education and the lack of access to online services and is the root cause of 21st century financial exclusion.


(v)                A Neyber report "The DNA of Financial Wellbeing" (copy attached) evidences the damaging consequences of financial exclusion.  Based on a UK wide survey of 10,000 employees, the report found that:


      70% of the UK workforce admitted to wasting a fifth of their time at work worrying about finances, costing the economy an estimated £120.7bn per annum

      At least 17.5m working hours were lost per year as a result of workers taking time off work due to financial stress

      55% of employees said that being under financial pressure affected their behaviour and ability to perform their job in the workplace – rising to 62% for those under 34 

      51% said that financial pressure affected their relationships with their colleagues

      31% lost sleep over money concerns, with 39% suffering from  anxiety


(vi)              The report also evidences how those financially excluded lack sufficient “buffer” savings to meet emergency expenditure needs; with over 30% of employees having less than a months’ salary held in reserve for these purposes. Those unable to meet short term expenditure needs are likely to resort to pay day lenders, further compounding their indebtedness and financial exclusion.


  1. Who is affected by financial exclusion? Do different sectors of society experience financial exclusion in different ways? To what extent, and how, does financial exclusion affect those living in isolated or remote communities?


(i)                  By our definition (an inability to access goods and services with convenience and at a cost that is reasonable) people across UK society are affected by financial exclusion. And this will be found in varying degrees depending on the age, social class, level of education and geographic location of those concerned. Given that this is the case, various sectors of society will experience financial exclusion in different ways. What matters most are the consequences for individuals or communities across the UK; with those at the extremes being unable to live their lives in relative contentment.


(ii)                In the pre-digital age those living in geographically remote communities, without the physical road or rail infrastructure to link them up to major conurbations, would have numbered amongst the most financially excluded in society. Today communities affected by deindustrialisation, migrants with no access to bank accounts or people with limited education, poor physical/mental health and a lack of digital connectivity will most likely be financially excluded.


(iii)              The propensity for financial institutions (Post Office, Banks, Building Societies, Insurance Companies) to lessen their physical presence too will also add to financial exclusion; with the elderly being most affected by this due to their inability to travel or a cultural aversion to financial services being largely processed online. In a rapidly ageing society with growing longevity this will become an increasingly important factor.   


  1. What is the relationship between financial exclusion and other forms of exclusion, disadvantage or deprivation? What role does problem debt play in financial exclusion?

(i)                  We believe that financial exclusion is one of the most the most visible symptoms of social exclusion. This is formally defined by the EU as “having a household income below the poverty threshold, being severely materially deprived, or living in a household with low work intensity”. The two are inextricably linked with financial exclusion being unlikely to be evident in the absence of social exclusion. This is why the most extreme instances of financial exclusion can be found amongst people living on benefits, with low wages or in areas of high unemployment.


(ii)                Indebtedness arises directly from the factors that define social exclusion and results from people not having ease of access to financial services with reasonable credit costs. Those with the lowest incomes need to borrow the most but, as a result of a credit rating system that is gamed against them, they will pay the highest interest charges.


(iii)              The financially excluded will also fall prey to goods or service providers who are content to profit from exploiting financially vulnerable customers. Those involved range from pay day lenders to utility companies who demand that the poorest pay the most for their power or water via pre-payment meters. An accompanying lack of consumer protection traps many families in an ecosystem of financial exclusion that persists across generations.


  1. Do individuals with disabilities, or those with mental health problems, face particular issues in regard to financial exclusion?


(i)                  We believe that those with physical and/or mental illness will particularly be affected by financial exclusion. This is largely due to their falling within the definition (see 3.i) of social exclusion. Those most critically affected will have low incomes due to the nature of their employment, subsist in part on benefits or not work at all.


(ii)                Their ability to access financial services, with ease and at a reasonable cost, will be diminished by factors such as a lack of access to online services, an inability to cope with financial administration and providers whose products are not designed with the needs of the physically or mentally impaired in mind.


(iii)              For those with mental illness, significant dangers lie in their dealings with the providers of goods and services. People suffering from anxiety, depression or in a manic state might take critical financial decisions at the peak of their ill health, with deleterious impacts on their financial wellbeing. They could, for example, spend unwisely, gamble frivolously or take loans via banks or credit cards. All of which would be undetectable by online or high street financial/retail outlets; whose staff are not trained to detect such behaviors or prevent transactions taking place.


Financial education and capability

  1. Are there appropriate education and advisory services, including in schools, for young people and adults? If not, how might they be improved?


(i)                  We believe that social exclusion and financial exclusion will often be ingrained within families and communities. Where this is of the most extreme nature, strategic interventions by both Government and third sector providers will be of the greatest benefit. Initiatives aimed at helping the most troubled families have already been put in place by the Government that seeks to address their specific needs. What matters here is the effective targeting of educational recourses towards those in the greatest need.


(ii)                For the physically ill and mentally ill we would recommend that providers of both goods and services have staff trained to address their specific needs. Educational initiatives of this nature will help to ensure that people working in shops, supermarkets or online retail sites provide equality of treatment for financially vulnerable customers. The Sainsbury’s supermarket chain has already embraced this requirement in a pilot “slow shopping” project that enables people suffering from dementia to take greater time in store and at the checkout when making their purchases.


(iii)              For those not included in (5.i) and (5.ii) above educational initiatives could help to lessen financial exclusion. We believe that there are considerable merits in young people being made aware of how to manage their finances and access services at a reasonable cost.


(iv)              In principle we believe that the education authorities covering England, Wales, Scotland and Northern Ireland should agree a “financial literacy” module for inclusion in their respective national curricula. Ideally this would cover the basic principles of money management and in the latter stages of school life encourage understanding of financial products and the role of the major institutions.



  1. How can financial literacy and capability be maintained and developed over the course of a person’s lifetime?


(i)                  (5.iv) above suggests how financial literacy could be established throughout the school curriculum beginning in primary education and leading to the point of departure for apprenticeship (age 16) or University (age 18). In all respects we would envisage people developing sufficient financial knowledge throughout their schooling. This would ensure that they are prepared to establish bank accounts, save money to meet both emergency and long term expenditure needs, avoid excessive indebtedness and take out insurance where necessary.


(ii)                As people move from school or University into the workplace the social touch points for providing/accessing financial education become much more diffuse. This poses a challenge because at these points in life people will be beginning to take the long-term financial decisions that will govern their future financial wellbeing.


(iii)              We believe that the workplace provides the most ideal juncture for the continuation of financial education. This is because employers have a direct interest in the financial wellbeing of their staff and are largely responsible for their continuing professional development (CPD). While not seeking to impose additional burdens on hard pressed employers we would suggest that they add financial literacy to company induction and ongoing training programmes. The training could take place at key stages throughout their employee’s life leading all the way up to retirement. Given the propensity for people to frequently move between employers during their career, this should be put on a nationally agreed curriculum and shared across the UK labour market.


(iv)              Neyber has developed a new financial education portal that is available to borrowers across our entire customer base.  The portal is focused on improving the financial wellbeing of borrowers. It is based upon the principle of providing people with conversational insights that are tailored to their personal financial circumstances. This is in recognition of the growing demand for financial educational resources that exists throughout the UK employment market.


(v)                Where people are unemployed or unable to work, financial literacy training could be provided through third sector providers such as the Citizen’s Advice Bureau, at community centres or as an online resource for those who are housebound.

Addressing financial exclusion

  1. What role should the concept of ‘personal responsibility’ play in addressing financial exclusion? Is appropriate support available for the most excluded and, if not, how should support be strengthened? What role should Government, the charitable sector and business play in tackling financial exclusion?


(i)                  The record levels of indebtedness in the UK and evidence of how financial stress is impacting upon peoples lives entirely negates a laissez faire approach to financial exclusion. As a nation we have a collective responsibility to address financial exclusion, because it is morally right, beyond the powers of most individuals to remedy and the curative power lies in the hands of civil society.


(ii)                To decide whether appropriate support exists for the “most excluded” we first need to agree who is included in this category. Our belief is that financial exclusion is symptomatic of social exclusion and, if you accept this premise, then both those considered to be the “most excluded” and the curative actions needed to support them require multi-agency interventions involving the Government and third sector organisations.


(iii)              As a starting point we would suggest that this Select Committee seeks to define the “most excluded” during the course of its deliberations. In Neyber’s view this would identify those who were most critically affected by their inability to access financial services with ease and at a reasonable cost. Accompanying socio-economic analysis of the impact this form of exclusion has on the lives of both individuals and communities would be helpful, too.


(iv)              This suggested socio-economic analysis would enable the Government, financial services providers and the third sector to coalesce around a policy agenda that served to:


    1. Acknowledge and address the link between social and financial exclusion
    2. Derive tailored interventions to help those defined as “most excluded”
    3. Establish a Bill of fundamental rights to counter financial exclusion
    4. Agree a statutory “public service obligation” to treat customers fairly for the providers of goods and services across the financial service and retail sectors


(v)                This approach would also be accordance with the work, inspired by the Prime Minister, across HM Government to discern how greater equality can be achieved across society, with specific reference to those most excluded in contemporary Britain.


  1. Are appropriate financial services and products available for those who are experiencing financial exclusion? What might be done to address any deficit? What role should banks play in increasing access for those most at risk of exclusion?  What is the role of the Post Office in providing access to financial services for such customers, and how might that role develop?

(i)                  Banks and other financial institutions are encouraged to become more inclusive around their lending practices. However the reality is that the most excluded lack access to affordable credit due to perceived risk around their ability to repay. This could either be due to insufficient information around borrower characteristics (thin credit files) or previously poor borrower behaviour, driving lower credit scores. Encouraging banks to adopt a more inclusive attitude towards lending involves taking on more risk, and this is wholly inconsistent with the Government’s objective of having a better capitalised banking sector with lower leverage. As such, any solution to the problem of exclusion needs to address the risk point, either through better data on borrowers’ ability to repay and/or improved management of defaults.


(ii)                Financial services and products are traditionally designed to profit the provider, with a designated customer cohort delineated for advertising/marketing purposes. Providers rationally take a supply as opposed to a demand led approach in product design due to their legitimate commercial considerations. This is why those who are most financially excluded have a limited range of products available to them and are forced to pay more.


(iii)              The difficulty in designing products aimed at the financially excluded lies in the complexity of this customer cohort. As described at 3 (i) those most socially excluded have needs which go far beyond the scope of product designers. Their financial exclusion is derived from poverty, low incomes and unemployment, with little opportunity to remedy this arising from a more “inclusion friendly” Post Office or banks.


(iv)              We would suggest that a substantive remedy lies in the Financial Conduct Authority (FCA) undertaking a consumer/industry consultation process aimed at defining:

    1. The most effective means for providing common access to financial services at reasonable costs to the majority of consumers
    2. Parameters for the industry to observe in the sale of products to those potentially experiencing financial exclusion
    3. A statutory public service obligation for the UK’s banks and financial service providers


(v)                Neyber has already proved that innovative product design can deliver greater access to reasonably priced financial services for the majority of people and boost financial inclusion. Our business model negates the commonly perceived risks seen in the consumer credit market. This is because we work directly with employers, are able to better know our customers and minimise credit defaults through taking loan repayments via deductions from employee salaries. We are therefore able to approve 75% of our loan applications and to help more people achieve greater financial wellbeing. For those that we decline for credit a route towards debt management advice is provided through our partnership with Payplan one of the UK’s leading debt advice organisations. This means that nobody is left out by the Neyber business model.


(vi)              Affordability is a fundamental consideration in all of our loan decisions, as is the financial wellbeing of our potential and current customers. In contrast, traditional lenders such as the high street banks and P2P providers decline the great majority of their applicants. This is due to their inability to mitigate the risks associated with unsecured borrowing and the costs arising from the use of inefficient legacy technologies. Their failure to provide credit also financially excludes loan applicants, who in the worst circumstances, are forced to access loans from pay day lenders at punitive interest rates.

Accessing affordable credit

  1. What has been the impact of recent changes to the consumer credit market – such as the capping of payday loans - on those facing financial exclusion? How can it be ensured that those in need of affordable credit can access appropriate products or services?


(i)                  We consider that it is too early to draw conclusions about the effect of capping payday loans. What is clear is that the demand for unsecured credit continues to grow across the UK and that average per household debt, at £11,500, is at record levels. It is therefore essential to ensure that those needing credit can access it at affordable levels or receive appropriate advice in the event of their exceeding their ability to repay outstanding debts.


(ii)                Regulatory changes capping payday interest rates were designed to protect borrowers from opportunistic lending practices. The regulatory changes have led to a significant retreat in the size of the payday lending market. The changes rightly forced lenders to assess affordability at the point of the loan being originated. However, the changes have failed to address the demand problem. The emergence of peer to peer lenders over the past 5 years has also served the prime borrower market and again does little to provide any alternative to those with less than prime credit scores.


(iii)              A longer term policy solution is suggested at 7 (iv) above for establishing a sustainable means of delivering fairly priced credit to the financially excluded. In the interim we would suggest that the remedy suggested at 8 (iv) above is enacted by the FCA with the active participation of HM Government, the devolved authorities, third sector providers and the financial services industry.


(iv)              Neyber’s business model, as detailed in 8 (v-vi) above, has already delivered access to affordable credit for thousands of working people across the UK. The company’s loans have enabled borrowers to consolidate their existing debt at lower interest rates, saving up to 20% of their annual credit costs. Neyber’s growing network of partnerships with public and private sector employers will ensure that an ever increasing number of people will be able to access affordable credit in their workplace.


Government policy and regulation

  1. How effective has Government policy been in reducing and preventing financial exclusion? Does the Government have a leadership role to play in addressing exclusion?


(i)                  We believe that you cannot abstract financial from overall social exclusion, as the former is symptomatic of the latter. The fact that our new Prime Minister has put inclusion and equality at the heart of her policy agenda provides an apt assessment of the failure of successive administrations in understanding and addressing exclusion. We do believe that the Government has a fundamental role to play in addressing all forms of exclusion, whether for financial, gender, race or cultural purposes. The actions suggested at 7 (iv) above would provide a strategic approach addressing the social and related financial exclusion agenda.


  1. What has been the impact of recent welfare reforms on financial exclusion?


(i)                  Our view is set out in 10 (i) above with regards to the relationship between social and financial exclusion.


(ii)                Given that the welfare reforms (Universal Credit, Benefit Cap and Under Occupancy Charge) were not designed to address financial exclusion, it is near impossible to provide an empirical assessment. What is clear is that those socially and, by dint of circumstance, financially excluded continue to suffer from their inability to easily access financial services at a reasonable cost. This is regardless of the new welfare policy agenda and more reflective of the austerity economic policies of the past eight years.


  1. How effectively are policies on financial exclusion coordinated across central Government? Is there an appropriate balance and interaction between the work of central Government and the work of local and regional authorities, and the devolved administrations?


(i)                  Our view is set out in 10 (i) above with regards to the relationship between social and financial exclusion.


(ii)                The fact that the Prime Minister has demanded that HM Government focuses its domestic agenda on diminishing exclusion and boosting equality provides an apt response. We believe that much work needs to be done over the life of this Parliament and the next to ensure that inclusion policies are coordinated and delivering across the national, devolved and local Government. The policy agenda set out in 7 (iv) above would provide the basis for this.


  1. To what extent is the regulation of financial products and services in the UK tackling financial exclusion? Are alternative or additional regulatory interventions required to address financial exclusion? What balance should be struck between regulations and incentives for financial institutions?


(i)                  Our view is set out in 10 (i) above with regards to the relationship between social and financial exclusion.

(ii)                The FCA is not configured or mandated to address social exclusion or symptomatic “financial exclusion”. There may be an intangible benefit arising from the efficient policing of providers by the FCA and its requirement for customers to be “treated fairly”; but this form of market intervention fails to address the core issue of people having equality of access to financial services at a reasonable cost.


(iii)              We believe that an appropriate balance between the rights and responsibilities of producers and consumers, whether excluded or not, would be achieved by the actions suggested at 7 (iv).

Financial technology (Fintech)

  1. Does the Government have a role to play in ensuring that the development of financial technologies (FinTech) and data capture helps to address financial exclusion? If so, what should this role be?


(i)                  It is essential that the Government and FCA help the FinTech sector to maintain its growth trajectory. This can best be achieved by a supportive approach to regulation, progressive corporate taxation and incentives for start-up businesses. Both HM Treasury and the FCA have a core role to play in these respects; but we judge it essential for the FinTech sector to take responsibility for its own growth, without recourse to public funds. The FinTech sector benefits from the representation provided by its trade body “Innovate Finance”, whose approach to the sector focuses on the pro-societal outputs that it can deliver. We envisage that these will include encouraging greater equality of access to financial services and to leadership roles in the industry for people of diverse, religious, gender and cultural backgrounds.


(ii)                We believe that the data capture by FinTech providers could contribute towards a greater understanding of financial exclusion. However the existing mass data stores, held by the credit reference agencies, could be of much greater and immediate use. The fact that this data source is withheld from public scrutiny, by these agencies and their clients, diminishes the potential for policy makers to gain a more thorough understanding of those who are socially and financially excluded. We recommend that these agencies operate with greater transparency in the interests of the socially and financially excluded.



14 September 2016