Context:
The Financial Lives survey is a substantial new source of evidence on the experiences of consumers in the retail financial market, including their financial situation, which products they buy, and their attitudes towards managing their money. FCA has also published weighted data tables and the full data set for this study.
The study:
The FCA commissioned Kantar Public to design the research, Critical Research to produce weighted data tables and Ignition House to verify the accuracy of the findings. The survey aims to:
- Estimate the number of adults in the UK who hold any one of 70 products (and understand the profile of both those who do and do not hold the products)
- Understand consumers as people and observe their financial behaviours
- Explore differences in the results, by different characteristics and population groups
- Demonstrate differences in behaviour and experiences by sectors
- Highlight or quantify harm or potential harm.
The survey had a total of 12,865 respondents, aged 18 and above, interviewed between December 2016 and April 2017. It collected information on demographics, attitudes to finance and financial services, product ownership, and assets and debts. All eligible respondents were asked questions about their experiences of fraud, scams or being unbanked. Further, more detailed questions were asked of random, representative samples of consumers.
Key findings:
Potential vulnerability and access
- Half of those interviewed showed one or more characteristics of potential vulnerability, either putting them at increased risk of harm, or meaning that they would suffer disproportionately if harm occurred. Those showing such characteristics are more likely to have used high-cost credit.
- Over two-thirds (69%) of the over 75s, and over three-quarters (77%) of the over 85s demonstrated characteristics of potential vulnerability.
- Nearly half of adults (47%) who pay rent said they would struggle to pay it if payments increased by less than £100 per month.
- A small proportion (3%) of UK adults are unbanked, but over three quarters (77%) show characteristics of potential vulnerability.
- At least 4.5 million UK adults report being refused a financial product in the previous two years.
Confidence
- Just under a quarter (24%) of adults have little or no confidence in managing their money and nearly half (46%) report having low knowledge about finances.
- Of all UK adults, the younger age group (18-24 year olds) report having the least confidence and knowledge about money management and financial matters.
Satisfaction
- Younger adults (18-24 year olds) were least satisfied with their financial circumstances.
- Satisfaction with finances only seems to increase from the age of 55; 21% of those aged 75 and over have low satisfaction with their finances.
- Over half (54%) of adults with a personal loan gave their provider a high satisfaction score.
Credit and Debt
- Three quarters of adults have had one or more credit products or loans in the past year.
- 3.1 million adults either currently have, or have had in the last year, high-cost loans.
- A quarter of adults have been overdrawn and 3.1 million adults have used an unauthorised overdraft facility in the past year.
- 3.6 million adults have borrowed from friends and family and 100,000 have borrowed from unregistered lenders.
Consumers ‘in difficulty’
- 4.1 million adults are classed as being ‘in difficulty’ due to failing to pay domestic bills or credit commitments in three or more of the past six months, with one-in-eight (13%) 25-35 year olds classed as being in difficulty.
Consumer understanding and decision-making
- Nearly 12 million people have insurance or protection products and would go for the cheapest option rather than appraise different products.
- Just over 12 million people do not think they have enough information to decide between different insurance policies.
- 400,000 adults who have accessed defined contribution pensions admitted to not understanding their options.
- Older adults are more likely to stick with a known brand; 82% of those aged over 75 preferring this compared with a UK average of 62%.
Points to consider:
Methodological limitations:
- Given the wide range of different products covered, sample sizes for many of the products considered were not sufficient to conduct in depth analysis.
- The study used mixed-mode interviewing, meaning that it could access more people who might not use the internet.
Generalisability/ transferability:
- The survey was based on random non-probability sampling. Using appropriate weighting, the study results can estimate the likely true population within measurable confidence intervals. Additionally, the large sample size also allowed for reliable population estimates to be provided for a number of sub-groups of interest.
