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Scotsman
27-05-2025
- Business
- Scotsman
In Scotland 2 per cent of the population are 'unbanked' according to major survey
A major new survey paints a mixed picture when it comes to how people in Scotland, and across the UK, are managing their finances and coping with money pressures. Sign up to our Scotsman Money newsletter, covering all you need to know to help manage your money. Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... The Financial Conduct Authority (FCA), the regulator, unveiled its latest Financial Lives Survey 2024 earlier this month, including a vast amount of data covering such areas as levels of cash savings, debt management, financial resilience and access to banking services. Its previous survey was from 2022. Emily Shepperd FCA | Supplied The new Financial Lives Survey found that the amount of 'unbanked' people in Scotland had fallen from 3 per cent in 2022 to 2 per cent of the population last year. But this was still higher than for the UK as a whole where the figure for 2024 was 1.6 per cent. This statistic refers to those with no current account with a bank, building society, credit union or e-money provider. Advertisement Hide Ad Advertisement Hide Ad Speaking to The Scotsman, FCA chief operating officer Emily Shepperd, said: 'If you don't have a bank account, it's very hard to get income and to pay bills and the knock on effect is substantial. There can be a number of underlying reasons for people not having a bank account, for example it can be linked to homelessness.' Shepperd added that it would be good to tackle this problem at an early age, from 18 to 24 years, to ensure people get off on a sound footing. She said it is never too early for financial education. 'We're pushing the whole financial inclusion piece, working a lot with government, firms and stakeholders,' explained Shepperd. 'We're also working with government to develop a national plan for financial inclusion.' Responding to the finding on the number of unbanked actress the UK, Sharon MacPherson of Financial Inclusion for Scotland (FIFS), said: 'While the reduction in the unbanked population to just under 1 million UK adults is a step forward, this still represents a significant number of people shut out from essential banking services, a cornerstone of financial inclusion.' Advertisement Hide Ad Advertisement Hide Ad As part of its financial inclusion strategy, FIFS is planning a School Banking Pilot Project, enhancing banking inclusion and improving access to bank accounts for young people. A worrying statistic in the FCA's latest survey is that one in ten in the UK have no cash savings, and another 21 per cent have less than £1,000 to draw on in an emergency. The regulator's research also shows that one in four people in the UK have low financial resilience, meaning that they have missed payments, are struggling to keep up with commitments, or don't have savings to help them through difficulties. In Scotland, 23 per cent of people have low financial resilience - low savings, heavily burdened by domestic bills/credit commitments or in financial difficulties - down from 26 per cent in 2022. Some 12 per cent of Scots found it a heavy burden to keep up with domestic bills and/or credit commitments, an improvement from 14 per cent in 2022. Almost a quarter in Scotland were in the precarious position of not being able to cover their living expenses for more than a month without having to borrow money or ask for help from friends and family. Advertisement Hide Ad Advertisement Hide Ad And 49 per cent of people north of the border showed signs of vulnerability, such as low resilience, low capability, poor health or experiencing a negative life event in the last 12 months. Shepperd said: 'It is a very large survey, so you would expect some mixed results. The fact you have one in 10 people in the UK have no cash savings and a further 21 per cent have got less than £1,000 is obviously somewhat concerning. If you are in financial difficulty, the best thing to do is to reach out. There are some really good free services around, like money helper.' And the FCA found that when consumers do seek support it makes financial pressures more manageable. Of the 1.7 million people in the UK who had used a debt advice or debt management service in the previous 12 months, 61 per cent said their debts were more manageable as a result. On a positive note, a reduction in digital exclusion has been identified in the survey. Across the UK it declined from 14 per cent in 2022 to 2 per cent in 2024, and in Scotland it fell from 15 per cent to 2 per cent. The FCA defines adults as being digitally excluded, if they never/very rarely use the internet, or they use the internet occasionally (less than once a week) but rate their ability to use it as poor or bad. Advertisement Hide Ad Advertisement Hide Ad Reasons for the drop in digital exclusion include the Covid-19 pandemic accelerating digital adoption across many sectors, including financial services. Additionally, ongoing improvements in digital banking – such as more user-friendly mobile apps and broader internet access have likely played a role. According to the FCA, even those who are better off could take steps to improve their long-term financial health. Some 61 per cent of people in the UK with more than £10,000 in investible assets held at least three-quarters of these assets in cash, rather than investments. The regulator wants to see more people holding mainstream investments to improve long-term returns. Shepperd commented that moving from cash to investments can be dependent on financial education. 'Part of our strategy is about building trust in financial services, and getting people to move into investments is an element of that. We've a campaign that's going to be running called InvestSmart that's to help consumers make better informed investment decisions,' she explained. 'We also have the reforming of the advice and guidance framework to make it clearer when people can give and receive advice - particularly in those moments that really matter like when you come into money or hit 55. Getting those who can afford it to invest is part of what we do. Advertisement Hide Ad Advertisement Hide Ad 'One of the themes of our strategy is helping consumers to make most of their financial lives, and underpinning that is Consumer Duty. It's about making sure firms explain their products in a language that people can understand.' Looking towards retirement, the FCA's survey found that one-third of UK adults with a defined contribution (DC) pension have less than £10,000 saved.
New Straits Times
16-05-2025
- Business
- New Straits Times
One in 10 people in Britain have zero savings
LONDON: One in 10 people in Britain have zero cash savings to draw on in an emergency, according to figures published on Friday by the UK's top financial watchdog, in findings that underscore the financial vulnerability of millions. The Financial Conduct Authority said another 21 per cent of people have less than 1,000 pounds (US$1,332) in savings and that 1.6 million, or 3 per cent of homeowners, had received support from mortgage or credit lenders to manage repayments in the last two years. The data makes sobering reading for Britain's banks and the policymakers tasked with steering a UK economy rattled by inflation, a cooling jobs market and the threat of a global trade war sparked by US President Donald Trump's tariff hikes. The Bank of England's Monetary Policy Committee was split three ways on its May interest rate decision, seven of the nine members backing cuts to reduce the cost of borrowing and keep the economy on track. Almost two-fifths of adults have unsecured debts, with a median amount of 2,500 pounds, the FCA said. "Our data shows that finances are stretched for many - with some unable to save for a rainy day. And we know that some do not have the confidence to invest," said Sarah Pritchard, Executive Director of Consumers and Competition at the FCA. The FCA's survey also found that one-third of adults with a defined contribution pension have less than 10,000 pounds saved, while another 12 per cent didn't know the size of their retirement pots. Only 8.6 per cent of people received financial advice on investments, pensions or retirement planning in the previous 12 months and around 900,000 adults were classed as "unbanked" in 2024, although this was down from 1.1 million in 2022. The FCA said it was working to improve access to financial services help, guidance and advice so that people struggling with debts can build a more financially resilient future. "The FCA's Financial Lives Survey lays bare the financial tightrope that millions are walking," Rachael Griffin, tax and financial planning expert at Quilter, said. "It speaks to a broader cultural reluctance to invest, and perhaps to a lack of confidence or understanding in navigating financial markets," she added.
BBC News
15-05-2025
- Business
- BBC News
One in 10 Britons have no savings, UK financial regulator says
Millions of people are walking a financial tightrope, with one in 10 UK adults saving no money at all, a major report has leaves many exposed to economic shocks and vulnerable to rising bills, according to the Financial Conduct Authority's (FCA) Financial Lives anxiety and stress levels were relatively high, particularly among those burdened by the regulator said the situation had not worsened since the start of the cost of living squeeze and free help was available for those facing trouble. Snapshot of our money The FCA's Financial Lives survey is a benchmark for the state of the nation's finances, with nearly 18,000 people questioned about how they deal with findings suggest that 13 million people - a quarter of the UK adult population - have low financial resilience. That means they have debts that are hard to manage, low savings, and have missed a series of bill was unchanged when compared with the previous Financial Lives survey, published in 2022, despite the pressure caused by inflation and rising essential bills on personal 10% of those asked had no cash saved at all. Another 21% had less than £1,000 tucked key findings in the wide-ranging report includeA total of 2.8 million people have persistent credit card debtNearly 12 million people feel overwhelmed or stressed dealing with financial matters, including 40% of adults with credit or loans saying they suffer anxiety and stressSome 3.8 million retirees are worried they don't have enough money to last their retirementDifficulties getting to a bank branch face nearly 10 million people"Our data shows that finances are stretched for many - with some unable to save for a rainy day," said Sarah Pritchard, from the FCA. Buy now, pay later surges The report also suggests that the use of buy now, pay later has risen significantly in recent 40% of lone parents and 35% of women aged between 25 and 34 use these deferred credit products, which remain nearly half of adults have outstanding unsecured debt, where the money borrowed is not backed up by FCA said the median average amount of debt outstanding among those with debt was £6,300. Among 18 to 34-year-olds with debt, the median average amount of debt outstanding was £12,500. But, after excluding student loans, that dropped to £1,300. Debt advisers say they routinely speak to people with mental health issues, which either result in financial difficulties or are caused by money say it takes courage to pick up the phone to ask for help, but free debt advice is available and has no impact on someone's credit score. How to deal with money worries Matt Dronfield, managing director of Debt Free Advice - a coalition of charities which can negotiate with creditors on behalf of borrowers - said rent or mortgage arrears, council tax and falling behind on utility bills were the three most common forms of debt. He said many callers were juggling multiple jobs, but unable to cover their essential expenses."It is so common. If you're not worried, then a friend or family member is definitely going to be," he said."We know you are more likely to tell your pet than your partner or loved one about your financial situation. So, speak to an expert debt adviser about the situation that you are in."If you were worried about your health, you'd see a doctor. If you're car wasn't working, you'd go to a mechanic. So, if you are worried about your finances, speak to an independent debt adviser, for free."He also said that people with no savings should consider "paying yourself first", by putting a few pounds into a savings account when their receive their could help get them into a savings habit, while still being able to cover the priority average amount people have saved is £5,000 to £6,000, the FCA's report suggests.
Yahoo
18-03-2025
- Automotive
- Yahoo
The car and home insurers charging 'exorbitant' interest rates on monthly payments
Some car and home insurers continue to charge "exorbitant" interest rates on monthly payments, research by consumer group Which? has found. More than 20 million people are estimated to pay for insurance using premium finance, according to the Financial Conduct Authority's (FCA) Financial Lives Survey. This type of financing allows people to pay for cover in instalments, as customers often pay this way because they struggle to afford the full cost of cover for the year upfront. In its research, Which? asked 52 car insurers and 46 home insurers what rate of interest they charged customers to pay for cover monthly. The vast majority of car insurers charge interest for customers to pay for cover monthly, said Which?, with only a small handful of saying they did not. The average annual percentage rate (APR) across the car insurers was found to be 22.84%. Meanwhile, half of the home insurers which responded to the Which? survey said they did not charge interest. The average APR across home insurers was found to be 21.59%, though Which? pointed out that a number of providers charge significantly more. Which? found that the highest APR among car insurers was from The Insurance Factory, which charged 30.72% for renewing customers and 34.08% for new customers. One Insurance Solution was found to have the highest APR among home insurance providers, with a rate of 30.72% for renewing customers and 34.08% for new customers. Which? said that these rates were comparable to those on credit cards, which had an average purchase APR of 35.42%, as of the end of February — though most have rates under 25%. The consumer group also conducted a mystery shop on car insurance providers that either did not respond or disclose their APRs in our survey, obtaining quotes as a 40-year-old Vauxhall Corsa driver based in South London. All but one (John Lewis) of the brands which provided a quote to the Which? mystery shopper had APRs higher than 25%, with the highest rate coming from GoSkippy at 28%. Read more: Best cash-saving deals ahead of Bank of England interest rate decision Among the 24 car insurance firms which did disclose rates in each of the three Which? surveys since March last year, the average APR has fallen slightly — from 23.14% to 21.03%. However, Which? said that there remain "concerningly" high rates, which in some cases are around or above 30%. Which? said it believed such high rates of interest were "difficult to justify", as the risk to insurers is smaller than for credit card lenders because non-payment can lead to a termination of the policy. In the launch of its market study into premium finance in October, the FCA said that it was concerned with "charges potentially being too high relative to the credit risk and cost of providing the service". Which? said that most brands with the highest APRs on repayments were connected to broker Markerstudy Distribution, and its parent organisation Markerstudy Group. A Markerstudy Distribution spokesperson told Which? that it had reduced rates of several of its brands, with further reductions planned in the coming months. As for home insurers, some 30 providers responded to Which? surveys conducted in August 2024 and February 2025. Of this group, three insurers — 1st Central, Admiral (ADM.L) and Hastings Direct — decreased their rates during this period, while Ecclesiastical (ELLA.L) stopped charging altogether at the beginning of March. Ecclesiastical's decision meant there were now 19 providers who do not charge interest on monthly insurance payments, with Which? saying that this raised questions as to why other firms could not follow suit. An Ecclesiastical spokesperson told Which? that by removing the interest charges, it was "helping to make our household premiums more affordable for those customers who need to spread the cost." Even so, Which? said it remained concerned that too many insurers were charging "unjustifiably" high interest rates to customers who could afford them the least. Read more: Average UK house asking price climbs by £3,876 in March The FCA, which has previously called premium finance a "tax on the poor", is expected to release the findings of its market study into this pricing practice in the summer. Which? believes that the financial regulator needs to work out what it costs firms to charge customers interest to pay insurance on a monthly basis, and whether this represents fair value, as per the requirements of its consumer duty standards. Rocio Concha, director of policy and advocacy at Which?, said: "People often don't pay for car and home insurance in monthly instalments out of choice, but financial necessity. For millions to be hit with excessive extra charges due to their circumstances seems like kicking customers when they are down — and this is exactly the kind of unfairness the regulator should have in its sights. 'Encouragingly, the FCA is now looking into this issue," he said. "As part of its market study, the regulator must get to the bottom of what fair rates of interest are by gathering information from firms on profit margins and commission levels — and ultimately be prepared to take tough action against firms continuing to charge excessively high rates of interest on monthly repayments." Read more: Chancellor urged to raise taxes ahead of spring statement Will the Bank of England slow down the pace of interest rate cuts? 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