24Oct

The Financial Conduct Authority (FCA) has published the results of the first Financial Lives Survey. Almost 13,000 adults were surveyed regarding their experiences of retail financial products and services.

Some of the findings of the survey include:

  • 50% of adults, and 53% of women, are potentially vulnerable in some way. Customers of financial services firms may be vulnerable for all manner of reasons, e.g. lack of financial literacy, illness, loss of mental capacity or serious financial difficulty. 69% of over 75s and 77% of over 85s display characteristics of vulnerability
  • 17% of single parents aged 18-34 are using high-cost credit, compared to just 6% of all respondents
  • 1 million (around 8%) are classed as being in financial difficulty, by virtue of having failed to pay domestic bills or meet credit commitments in at least three of the last six months. This figure increases to 13% in the 25-34 age group
  • 17% would struggle if their monthly rent or mortgage payment rose by just £50.
  • 19% of those aged 25-34 have no savings whatsoever, while a further 30% of this age group have less than £1,000 put by. Meanwhile, the over 65s have average cash savings of £45,000 per person
  • 15% of those aged 45 to 54 have an interest-only mortgage
  • Only 35% of those aged 45-54 have thought in detail about how they will manage in retirement. 15 million are not saving for retirement in any way, and 70% of the 18-24 age group have no private pension provision. Of those in the youngest age group who do have a defined contribution plan, 60% have less than £5,000 in their pot and 31% do not know the value of the plan, meaning that only 9% can definitely say they have more than £5,000 in their pot. Many commentators have reacted to the survey by calling for 18-year-olds to be automatically enrolled into workplace pensions – at present employers don’t need to enrol their staff until they reach age 22
  • One in four of those who have accessed their pension savings have no idea what arrangement they used to do so. 10% of the 55-64 age group incorrectly believe that pension drawdown is a method of obtaining a guaranteed income for life
  • 13% of those who have received professional financial advice during the last 12 months believe that their adviser has mis-sold them a product at some stage
  • 24% say they have “little or no confidence” when it comes to managing money, while 46% say their level of knowledge is low. 17 million people who hold motor insurance do not understand the term ‘no claims protection’

Andrew Bailey, FCA Chief Executive, said:

“I would like to thank everyone who took part in the survey. The findings give us a wealth of information which will be used to increase our knowledge and understanding of the issues affecting consumers and how to best protect them. The data gathered will be invaluable in helping the FCA prioritise our work. We also hope that the research will provide valuable insight for other organisations focusing on consumers and finance.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.