[INSIGHTS]: FCA Financial Lives Study

In 2022 the FCA completed and released its Financial Lives Study. This was an extensive piece of research looking at consumers, their interaction with financial services products and financial resilience.

The study has been highly informative and influential in the UK around the topics of vulnerability, characteristics to identify vulnerability, and issues around financial resilience.

Links to the reports are available below, with our summary below this.

Financial Lives Survey: 2023 6 month update

Financial Lives Survey: 2022 Summary

Financial Lives 2020 survey: Detailed report

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Financial Lives Survey: 2022 Summary

The Financial Conduct Authority (FCA) has released selected data from its Financial Lives survey, providing insights into the vulnerability and financial resilience of UK consumers in May 2022. The survey, conducted among over 19,000 respondents, examines various aspects of consumers’ financial situations and experiences with financial services providers. The data sheds light on the rising cost of living and its impact on individuals’ financial positions.

Key Findings

  • Many consumers are in vulnerable circumstances, facing challenges in managing their finances effectively.
  • A significant portion of consumers has low financial resilience, which hampers their ability to cope with unexpected financial shocks.
  • Certain groups are disproportionately affected by low financial resilience, highlighting disparities in financial stability.
  • The data also reveals variations in low financial resilience and financial difficulty across different regions of the UK.
  • The survey indicates signs that a larger number of people may struggle with their finances, potentially exacerbating financial vulnerability.

Financial Lives 2020 survey: Detailed report

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Key Findings

  • Trust in financial institutions remains low across the board, with banks being the most trusted and insurance companies the least trusted.
  • The Covid-19 pandemic has had a mixed impact on trust, with banks seeing a small improvement while mortgage lenders, financial advisers, pension companies, credit card companies, and insurance companies have experienced declines in trust.
  • Customers generally rate their own providers more highly than institutions in general, indicating the importance of personal experiences in building trust and satisfaction.
  • Problems reported by consumers include poor customer service, delays, IT system failures, unexpected fees, and charges, leading to increased stress and time spent resolving issues.
  • Adults heavily reliant on cash have coped to varying degrees with reduced access to bank branches, ATMs, and fewer businesses accepting cash during the pandemic.
  • Concerns about data security, identity theft, and misuse of account data remain obstacles to adopting open banking services.

Key Statistics

  • Only 20% of adults trust banks highly, while 44% have low trust in them.
  • 22% of adults trust insurance companies less because of Covid-19, while 11% trust them more.
  • 73% of adults heavily reliant on cash have coped with reduced access to bank branches and ATMs, while 16% have not coped.
  • 80% of those not willing to use open banking express concerns about financial loss due to fraudsters accessing their data, identity theft, and data security.

Key Take Aways

  1. Trust in financial institutions remains low, with banks being the most trusted and insurance companies the least trusted.
  2. The Covid-19 pandemic has impacted trust, with banks seeing a slight improvement and other financial institutions experiencing declines.
  3. Personal experiences with providers influence trust and satisfaction levels among customers.
  4. Problems with customer service, delays, and unexpected fees are common issues reported by consumers.
  5. Cash reliance during the pandemic has posed challenges for some adults, while others have adapted to reduced access to banking services.
  6. Concerns about data security and privacy hinder the adoption of open banking services.
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