Half of UK adults display characteristics of financial vulnerability.
18th October 2017.
The FCA has revealed the findings from its first Financial Lives Survey.
Financial Lives is the FCA’s largest tracking survey of consumers and their use of financial services, drawing on responses from just under 13,000 UK consumers aged 18 and over. The aim of the survey is to provide the FCA with unique insights into people’s experiences of retail financial products and services.
An estimated 4.1 million people are in financial difficulty owing to missed domestic or credit bills, according to the study.
It suggests 25.6 million consumers could be vulnerable to financial harm (50% of the UKs adult population. This means that they display at least one of a series of issues, such as lack of internet access or an overdraft, so their finances would be at an increased risk if something went wrong. A rise in interest rates, heavily hinted by policymakers at the Bank of England, could affect many of these people – especially if the Bank rate rose rapidly.
The 4.1 million already in difficulty – most likely to be aged between 25 and 34 – have failed to pay bills in three or more of the last six months.
Looking at the survey results from an age group perspective, the data reveal some interesting characteristics of UK consumers:
- Single parents aged 18-34 are 3 times as likely to use high-cost loans: 17% compared to the UK average of 6%
- We describe 13% of 25-34 year olds as being in difficulty, because they have missed paying domestic bills or meeting credit commitments in 3 or more of the last 6 months
- Just 35% of those aged 45-54 have given a great deal of thought as to how they will manage in retirement
- Those aged 65 and over are least likely to check if an internet site is secure before giving their bank or credit card details
The findings will be of concern to creditors, considering that we still exist in extremely loose financial conditions with interest rates still at historic lows and with UK unemployment rate, holding steady at the lowest level since 1975 , according to data from the Office for National Statistics shown today. With the number of unemployed decreasing by 52,000 from March to May to 1.44 million.
What will happen if interest rates rise and there is an increase in unemployment?
see our post earlier this week on comments from the head of the FCA
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