The Financial Conduct Authority (FCA) has revealed that around one in ten people have no cash savings at all, according to new research.
Through a survey, the FCA found that 21 per cent of people in the UK have less than £1,000 in savings to use in the event of 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.
Despite these struggles with savings and financial resilience, the FCA found that consumers often find seeking support makes managing financial pressures more manageable. In fact, of the 1.7 million people who had used a debt advice or debt management service in the previous 12 months, 61 per cent said their debts were more manageable as a result.
The FCA has also detailed 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. Around two per cent of adults (1.2 million) were digitally excluded, signalling a dramatic improvement from 14 per cent (6.9 million) in 2017.
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.”
Finding financial support
Individuals who are better off could also take steps to improve their long-term financial health. Sixty-one per cent 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 is urging people to hold more mainstream investments to improve long-term returns.
Looking towards retirement, the FCA’s survey found that 33 per cent of adults with a defined contribution pension have less than £10,000 saved.
In light of these findings, the regulator has asked 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.
Oliver Morley, chief executive at the Money and Pensions Service, which provides the MoneyHelper service, also said: “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 the MoneyHelper site and join the millions of people who have been supported.”
FCA supporting consumers
Recognising that consumers require more financial support, it has introduced new rules for a new form of support so that consumers can be guided on how to make the most of their pensions and to invest with greater confidence, without taking costly personalised financial advice.
It is also helping consumers to make better-informed investment decisions through its InvestSmart campaign, while supporting the government to develop a national plan for financial inclusion.
The FCA also says that it is continuing to set high standards across financial services through the implementation of the Consumer Duty. The regulator is also scrutinising the insurance sector to make sure people get fair value, for instance, on pure protection and premium finance.
