In Scotland today, the stark reality of financial exclusion cannot be overstated. More than a million Scots live in poverty, struggling daily with the high costs of basic needs and the heavy toll of the "poverty premium" - where the less well-off pay more for essential services. This financial imbalance not only undermines individual dignity but also stymies Scotland’s collective economic potential.

As recent data from the FCA’s Financial Lives Survey vividly illustrates, a significant portion of our population faces immense challenges: 34% of adults in Scotland are not coping financially, and many do not have even a month’s savings to cushion the blow of unexpected expenses. In such cases, many people will borrow money to pay for essential items.

However, mainstream banks tend to not lend to people who represent a poor credit risk. High-cost lenders have diminished due to tighter regulation. Credit unions do their best but have a duty not to lend to people who can’t afford it. The lack of affordable providers leads many people to rely on illegal and predatory lenders.

This is not just a personal crisis for those individuals; it is a societal issue that demands an urgent and structured response.

Our new two-year action-focused strategy from Financial Inclusion for Scotland represents a pivotal shift towards creating a more financially inclusive country. Our plan leverages the expanded scope of the Dormant Assets Scheme to catalyse funding into areas that desperately need it. By calling on the Scottish Government to direct these assets, we aim to boost the provision of affordable credit and ensure everyone has access to basic banking services, which are the bedrocks of financial inclusion.

But why focus so intensely on financial inclusion? Because access to fair financial services enables individuals to manage day-to-day expenses, absorb shocks, and invest in their futures. It empowers people, fostering a more resilient and prosperous society. Financial inclusion mitigates the risk of social exclusion and reduces the reliance on high-cost lending including illegal and predatory practices, which can spiral into deeper poverty.

As a group of members managed by Social Investment Scotland (SIS), our collaborative approach across government, private, and non-profit sectors underpins the strategy, ensuring that interventions are holistic and impactful. By fostering partnerships and nurturing innovative financial solutions, we can dismantle barriers and build pathways that uplift all individuals, especially the most vulnerable.

Tackling financial exclusion isn’t just about alleviating immediate financial distress. It’s about investing in the long-term vitality of Scotland’s economy and ensuring that growth and prosperity are shared equitably across our society. The journey to a more financially inclusive Scotland is crucial  - not only as a matter of economic efficiency but as a testament to our values as a compassionate, forward-thinking nation.

As Deputy First Minister, John Swinney said that he would “leave no stone unturned” to help people towards financial inclusion. Let’s embrace that spirit and take the opportunity to transform lives and strengthen our community fabric, ensuring that everyone has access to fair and affordable credit, as and when they need it.

Stephen Pearson is Chairman, Financial Inclusion for Scotland

Agenda is a column for outside contributors. Contact: agenda@theherald.co.uk