Social and Sustainable Capital (SASC), a UK fund manager and social enterprise, has invested GBP1.1 million in responsible lender, Five Lamps, based near Stockton-on-Tees.
The investment is part of a GBP5 million deal over six years that will help vulnerable households across the UK break out of the cycle of high-cost debt. SASC is one of nine investors and the deal represents the largest-ever single investment in a UK community lender.
The funding will mobilise over GBP60 million of lending, enabling Five Lamps to offer over 100,000 affordable personal loans under its Conduit brand, through a dedicated subsidiary called Five Lamps Trading Ltd.
Financial exclusion is a pressing issue in the UK, and high-cost credit is widespread. 3.1 million UK adults have one or more high-cost loans or have had one in the past year. Potentially vulnerable people are twice as likely to have used high-cost credit as other UK adults; younger single parents are three times as likely. 6.5 million UK adults have no cash savings, leaving them particularly vulnerable to financial shocks and more likely to turn to high-cost credit in times of financial need.
Five Lamps is a responsible finance provider, regulated by the Financial Conduct Authority, offering fair and affordable personal loans as an alternative solution to high-cost credit. To date it has provided close to GBP40 million of affordable personal loans primarily in the North East of England, but more recently in Scotland and, following considerable investment in systems and infrastructure, throughout England and Wales.
The new investment will allow Five Lamps to grow the scale and impact of affordable credit to vulnerable individuals nationally.
Peter Morris, Investment Director at SASCm says: “This is our first investment in this area and we’re delighted to be making a significant contribution from our Third Sector Investment Fund to the GBP5 million deal. Financial inclusion is a key issue where we believe social investment can play an important role. Five Lamps has demonstrated a strong track record and has been making affordable loans for some time in some of the most deprived areas in the UK.”
Graeme Oram, Chief Executive of Five Lamps, says: “This is a truly transformational investment which will enable us to help up to 100,000 financially excluded people break the cycle of high-cost debt which blights the lives of so many in our communities. The Financial Conduct Authority ‘High Cost Credit Review’ published recently highlighted the need for more alternatives to high-cost credit.
“At Five Lamps we are driven to make a difference to people’s lives. Too many people have little or no financial resilience and at times of crisis have little choice but to go to high-cost or, sometimes, unregulated lenders. We want these people to come to us.”