Responsible lender Five Lamps has today secured a £5 million investment to help vulnerable households across the UK break out of the cycle of high-cost debt.
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.
Up to 3.1 million adults in the UK have one or more high-cost loans in the past year and that ensures that financial exclusion remains a pressing issue.
Funded by nine social investors, including Big Issue Invest, the investment will mobilise over £60 million of lending, enabling Five Lamps to offer over 100,000 affordable loans, under their Conduit brand.
Representing the largest-ever single investment in a UK community lender, the investment will be delivered over six years. £1m in funding comes from Big Issue Invest, and the remainder from other specialist social investment funds including Social and Sustainable Capital FSE, North East Social Investment Fund and Social Investment Scotland, as well as charitable trusts the Esmée Fairbairn Foundation, the Joseph Rowntree Foundation, Barrow Cadbury Trust and Harpur Trust.
The latest investment will allow Five Lamps to grow the scale and impact of affordable credit to vulnerable individuals nationally, topping off their nearly £40m in affordable personal loans to date.
Graeme Oram, chief executive of Five Lamps, said the investment was “truly transformational”.
Oram added, “The Financial Conduct Authority ‘High Cost Credit Review’ published recently highlighted the need for more alternatives to high-cost credit and we at Five Lamps are delighted to be that different kind of lender. 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.”
Recent measures by the FCA to address the failures in the high cost credit market and a new £55 million government fund to improve financial inclusion highlight the gaps in the affordable finance market.
Big Issue Invest is pleased to be able to play a leading role in in financing the next phase of growth of Five Lamps’ affordable personal lending with investment directors saying they “look forward to increasing Five Lamps’ capacity to support individuals who can benefit from access to fair and responsible credit.”