FCA Survey Of UK Consumers Of Financial Services Holds Lessons For Banks And Politicians

The largest tracking survey in the United Kingdom specifically looking at consumers and their use of financial services turns a spotlight on the importance of recognising urban-rural differences in the country at a time of critical economic need for digital transformation. It is particularly acute as Britain continues, slowly and tortuously, to work out its exit from the European Union.

Financial Lives,  the first large-scale tracking survey of some 13,000 consumers in the UK conducted by the regulator the Financial Conduct Authority (FCA), forms the basis of a report released today that finds notable differences between urban and rural areas in Britain among those using consumer finance. 

In rural areas, where there is greater reliance on bank branches, it finds that a higher proportion of people have difficulty getting to a bank and tend not to be able to use online banking. However, it says that people in rural areas "are more likely to be satisfied with their overall financial circumstances."

By contrast, it says, "people living in urban areas are less likely to be satisfied with their overall financial position, are more likely to use high-cost loans and on average have higher levels of unsecured debt. "

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. Furthermore, it finds that of UK adults who never use the internet, 70% (or 3.7 million people) live in rural areas and the take-up of mobile banking in rural areas (23%) is nearly half that in urban areas (45%.).

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), says the FCA report. Adults’ average unsecured debt is £3,600 in urban areas, it says, 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%).

“This survey shows just how different the experience of financial services is for consumers across the country. That’s important for us, as we shape financial services policy. But it is also important for firms, as they decide how best to serve their customers" says Andrew Bailey, FCA Chief Executive.

A startling revelation from the FCA's survey is that over half (51%) of retired people in rural areas rely mainly on the State Pension – this is their main income compared to 37% in urban areas.

In terms of satisfaction with overall financial circumstances: 27% of adults in rural areas are highly satisfied, compared with 20% of adults in urban areas. But satisfaction in London is particularly low with just 16% being highly satisfied with their finances, compared with the national average of 21%, says the report.

It finds that across England, the highest proportion of adults with characteristics of potential vulnerability are found in the North West (55%). This compares to 46% in the South West.

Adults in London have the highest levels of over-indebtedness (17% compared to 15% across the UK) and those living in Yorkshire and the Humber are most likely to be ‘in difficulty’ (11% compared to the UK average of 8%).

Just over one in ten of the adult population (13%) have no savings.

But - again, worth noting -  the report also shows there is a clear North-South divide with more people in the North having no savings. 17% of people in the North West and 16% in the North East have no savings compared to 9% in the South East and 10% in the South West. 

It would seem (without an in-depth look at the report) that there may be a great divide not only in consumer aspirations in urban v rural areas, but by implication also in attitudes to risk that coincide with willingness to adopt new technology. Certainly, these findings on consumer behaviour appear to suggest that UK  finance consumers across rural as well as urban areas would benefit from better education on their changing options as well as on the use of technology as a tool to empower the individual consumer.

As Mr Bailey points out, the findings of the survey are important and should be useful to firms that wish to better serve their customers.

UK banks are said to be closing 60 branches a month as more consumers move online, according to research from consumer group Which?. It revealed last week that 2,868 branches have closed in the UK since 2015, or are scheduled to close by the end of 2018. A recent media report suggested that RBS, which is still 62% owned by the taxpayer, was closing branches in order to shed small business customers.

The FCA has released weighted data tables which provide details of the survey findings, it says "so that local decision-makers and other organisations can use the information to consider what they can do to help support people who may be struggling financially.

The regulator says in this report that it has has put "understanding consumers as people" and observing their financial behaviour and experience at the heart of what it seeks to understand. In the first cut of the data, it has presented results primarily by age.

Politicians might also wish to take particular note of both the survey and the FCA report.