The Financial Conduct Authority (FCA) has found that one in ten people have no cash savings at all, and another 21% have less than £1,000 to draw on in an emergency. The regulator’s research also shows that one in four people in the UK have low financial resilience, meaning that they have missed payments, are struggling to keep up with commitments, or don’t have savings to help them through difficulties.
However, there is also good news. The FCA found when consumers seek support it makes financial pressures more manageable. Of the 1.7 million people who had used a debt advice or debt management service in the previous 12 months, 61% said their debts were more manageable as a result. Lenders also have a range of options available to help people struggling with repayments.
There has also been progress on access to basic banking services such as an increase in consumers who hold current accounts and a reduction in people being denied basic bank accounts. There are also more people banking online or with a mobile app. 1.2 million adults (2%) were digitally excluded, a dramatic improvement from 6.9 million (14%) in 2017.
Even those who are better off could take steps to improve their long-term financial health. 61% of people with more than £10,000 in investible assets held at least three-quarters of these assets in cash, rather than investments. The FCA wants to see more people holding mainstream investments to improve long-term returns.
Looking towards retirement, the FCA’s survey found that one-third (33%) of adults with a defined contribution pension have less than £10,000 saved.
In light of these findings, the regulator is urging consumers to reach out to their lender if they’re struggling with their payments and get help with pensions and investment decisions to improve their long-term financial health.
As part of its new strategy, the FCA is working to improve people’s access to help, guidance and advice so that everyone can access the support they need, at a cost they can afford, to make informed decisions for their financial future.
Sarah Pritchard, Executive Director of Consumers and Competition at the FCA, commented:
“Our data shows that finances are stretched for many - with some unable to save for a rainy day. And we know that some do not have the confidence to invest. But there are improvements – more people with current accounts and less digital exclusion. Our strategy will build on this to help people better navigate their financial lives.”
Oliver Morley, Chief Executive at the Money and Pensions Service, which provides the MoneyHelper service, says:
“People who experience individual financial wellbeing are less stressed about money which in turn has positive effects on their health, relationships, and work. Through MoneyHelper – our free and impartial service – we can help make your money and pension choices clearer by cutting through the complexity, explaining what you need to do and how you can do it.
“I’d encourage anyone who is worried about their money or pensions to visit www.moneyhelper.org.uk and join the millions of people who have been supported.”
