The Financial Conduct Authority (FCA) released its Financial Lives Survey 2024, offering a comprehensive overview of UK adults’ financial situations amid ongoing economic challenges. Conducted between December 2023 and January 2024 with 3,450 participants, the survey highlights both improvements and persistent vulnerabilities in financial resilience, savings, debt, and access to financial services.
Key Findings
Financial Resilience and Vulnerability
- Improved Coping Mechanisms: The number of adults struggling to pay bills and credit repayments decreased to 7.4 million in January 2024 from 10.9 million in January 2023.
- Persistent Financial Strain: Despite improvements, 14.6 million adults reported either not coping financially or finding it difficult to cope.
- Savings Depletion: Approximately 23% of respondents used their savings or investments to manage everyday costs, with this figure rising to 40% among those not coping financially.
- Debt Levels: Nearly 40% of adults carry unsecured debts, with a median amount of £2,500.
Impact on Savings and Investments
- Reduced Saving Activities: 44% of adults stopped or reduced saving or investing in the previous 12 months, up from 40% in 2023.
- Pension Contributions: Only 3% of respondents stopped or reduced pension contributions, indicating a prioritisation of long-term savings.
Insurance and Protection Policies
- Policy Cancellations: Almost 20% of UK adults cancelled insurance or protection policies in the last 12 months to save money, with general insurance (e.g., pet and gadget insurance) being most affected.
- Reduced Coverage: Nearly 10% reduced or considered reducing their policy coverage, particularly among lower-income households.
Access to Financial Services
- Unbanked Population: The number of adults without a bank account decreased from 1.1 million in 2022 to 900,000 in 2024.
- Digital Banking Usage: Approximately 88% of adults used online or mobile banking services in 2022, up from 77% in 2017.
Seeking Financial Help
- Financial Advice: Only 9% of UK adults received regulated financial advice in the previous 12 months, with lower rates among those with less wealth.
- Support Services: 2.7 million adults sought help from lenders, debt advisers, or financial support charities due to financial difficulties, with 47% reporting improved financial positions after seeking help.
Demographic Disparities
- Renters and Low-Income Households: Renters were more than twice as likely as mortgage holders to report not coping financially (50% vs. 24%).
- Regional Variations: Individuals in the North of England and other deprived areas faced greater financial challenges.
- Ethnic Minorities and Single Parents: These groups were more likely to experience financial difficulty and reduce pension contributions.
FCA Initiatives
- Consumer Duty: The FCA emphasised the importance of its Consumer Duty, aiming to improve customer support and ensure products meet consumers’ needs.
- Support for Borrowers: The FCA made permanent its expectation that lenders support borrowers in difficulty, including through budgeting tools and tailored mortgage forbearance.
- Pension Guidance: The FCA proposed offering free, targeted pension support to help individuals make informed retirement decisions.
For more detailed information, you can access the full report here: Financial Lives Survey 2024 Key Findings.
