Financial Lives conclusions make uncomfortable reading

FCA has published the results of its latest Financial Lives survey, which it says serve to highlight the importance of the Consumer Duty.

During the year to May 2022:

  • less than half of UK adults had confidence in the UK financial services industry and only just over one third thought firms are generally honest and transparent in the way they treat customers;
  • people with one or more characteristic of vulnerability were more likely to report that customer services did not help them;
  • 7.4 million people said they had unsuccessfully tried to contact their provider – reporting issues such as poor customer service, IT failures, sales pressure and the provider not following instructions or making mistakes;
  • 4.9 million people who used communications from a firm to help make a decision said the communications did not actually help at all; but
  • on the slightly brighter side, higher proportions of respondents expressed trust in their own provider than in the industry generally.

The survey also showed that 88% of adults now bank online or via an app, but 6% (or 3.1 million people) still use cash a lot and rely on face-to-face services.

As at January 2023, data showed that:

  • nearly 90% of adults had cut back on spending over the past 6 months and over one third were finding it impossible or difficult to cope financially;
  • the proportion of adults in financial difficulty increased from 8% in May 2022 to 11% in January 2023, with 21% finding paying bills a heavy burden (up from 15%);
  • 77% felt the burden of keeping up with bills and commitments had increased and over two thirds of respondents had seen their financial situation worsen and had less (or in 15% of cases, no) disposable income;
  • 29% had seen unsecured debt and mortgage increases;
  • 3% said they were not coping financially at all, 11% were finding it very difficult and 22% quite difficult to cope;
  • over half of adults had dipped into savings or investments, or had stopped saving; and
  • 3.6m had cancelled at least one insurance policy because of the cost of living – often mobile phone or gadget insurance, pet insurance or extended warranties.

Emma Radmore