FCA Reveals Urban-Rural Differences in How Consumers Experience FS

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The Financial Conduct Authority (FCA) has today published the latest analysis from its Financial Lives Survey 2017 on the financial situation of people across the United Kingdom and highlights where in the UK people may be more vulnerable. The survey, which is split into fifteen geographic areas across the UK is based on nearly 13,000 face-to-face and online interviews conducted between December 2016 and April 2017, and it reveals a wealth of information about different types of consumers and their differing experiences of financial products and services. The survey is part of the FCA’s commitment to serving the public interest by improving how financial markets function and how firms conduct their business.

The survey provides a wealth of information. The analysis shows that there are differences in how people in different parts of the UK, including rural and urban areas, experience financial services, such as:

  • Difficulty getting to a bank – in rural areas, a higher than average proportion of adults (13%) aged 55 and over, or who are younger and have a long-term health condition, have difficulty getting to a bank. This compares to 9% in urban areas. 70% (or 3.7 million people) of UK adults who never use the internet live in rural areas; and the take-up of mobile banking in rural areas (23%) is nearly half that in urban areas (45%). 3% of UK adults are unbanked (with no current account or alternative e-money account); of all those who are unbanked, 20% are in London.
  • Use of high-cost loans and have more debt – there is a higher concentration of adults with high-cost loans in urban areas (7% or 2.4 million people) than in rural areas (5% or 0.6 million people). Adults’ average unsecured debt is £3,600 in urban areas, compared with £2,510 in rural locations. Those paying for credit are more likely to be in urban areas (49%) compared with rural areas (37%). Greater proportions of adults use consumer credit in urban (77%) than rural (68%) areas. Compared with the UK average of 15%, greater proportions of adults are over-indebted in London (17%).
  • Over half (51%) of retired people in rural areas rely mainly on the State Pension – as compared to 37% in urban areas.
  • Satisfaction with overall financial circumstances: 27% of adults in rural areas are highly satisfied, compared with 20% of adults in urban areas. Satisfaction in London is particularly low with just 16% being highly satisfied, compared with the national average of 21%. Only 39% of UK adults trust financial advisers to act in their best interest and only 31% feel that financial firms are honest and transparent.

This report paints a picture of the financial situations of people in the UK, highlighting the pronounced demographic variations such as age, employment, household income and health. The picture of mortgage debt reflects the differences in house prices and incomes. Findings show that people in rural areas are more likely to own their own home, are less likely to have a credit or loan product, but are more likely to show characteristics of potential vulnerability, as compared with people in urban areas. Despite potential vulnerability levels being higher in rural areas, there is a greater proportion of adults ‘in difficulty’ in urban areas. Potential vulnerability refers to those adults who may suffer disproportionately if things go wrong, because they have low financial resilience; or to those who may be less able to engage with their finances or with financial services. The reasons for this can vary from suffering a recent life event (such as redundancy, bereavement, or divorce), low financial capability, or a health-related problem that affects a person’s day to day activities a lot.

In the UK almost three in five (62% or 31.5 million people) adults aged 18 and over are in work. Full-time employees account for 68% of those in work, part-time employees account for 19%, and the self-employed for 13%. More than one in five (23%) UK adults are retired. 88% of UK adults have some form of educational attainment, with two in five (41%) having a higher education qualification, and one in seven (15%) having a higher or postgraduate qualification.

A lack of confidence in the financial services industry and the belief that financial firms are not honest and transparent is pervasive across the UK.

Financial services firms should read the report and consider how they could contribute, in terms of better supporting vulnerable consumers or of reverting the trend of distrust in their services. This would be an advantage for both consumers and the services of the industry as a whole.