Around 13.1 million adults had low financial resilience last year, the City regulator has estimated.
The figure, released in the Financial Conduct Authority’s Financial Lives May 2024 survey, equates to around one in four (24%) adults across the UK.
Adults are considered as having low financial resilience if they have low levels of savings which could get them through a tough patch, are heavily burdened by existing bills and/or credit commitments, or are in financial difficulty, having missed paying bills in at least three of the past six months.
The FCA said the figure for May 2024 is similar to two years earlier, when the number was 12.9 million.
It also estimated that one in 10 adults has no cash savings, with 90% having some money put away.
A fifth (21%) of adults have less than £1,000 to draw on in an emergency.
Just over a third (35%) are estimated to have money held in investments.
The FCA said there has been an increase in the number of adults who have a current account in recent years, and a corresponding decline in “unbanked” adults.
Around 52.5 million adults held a current account last year, up from 50.8 million in 2022. Around 900,000 people were unbanked in 2024 with no current account, down from 1.1 million in 2022.
The FCA said there has been an increase in people accessing basic bank accounts, with refusal rates among applicants having declined. These no-frills accounts enable people with a poor credit history to have somewhere to receive payments and pay bills from.
Nearly 18,000 UK adults completed the 2024 survey.
Researchers also found that more people are banking online or with a mobile app.
In 2017, 10.6 million day-to-day account holders did not bank online or use a mobile app – but this had fallen to 3.3 million by last year.
Some 26.4 million adults had characteristics of vulnerability last year, falling from 27.3 million in 2022. Vulnerability can stem from factors such as poor health, negative life events, low resilience or low capability.
One in 12 (8%) adults were constantly overdrawn or usually overdrawn by the time they got paid or received their income last year, unchanged from 2022.
One in 20 adults (4.8%) were heavy users of cash, down from 5.8% in 2022.
More than half (59%) of heavy cash users were finding it more difficult to withdraw money because a local bank branch, post office or ATM had either permanently closed or reduced its opening hours.
The FCA also found that when consumers seek support, it makes financial pressures more manageable.
Of the 1.7 million people who had used a debt advice or debt management service in the previous 12 months, six in 10 (61%) said their debts were more manageable as a result. Lenders have a range of options available to help people struggling with repayments.
The research also indicated that some people who are more financially comfortable could still take steps to improve their long-term financial health.
Six in 10 (61%) people with more than £10,000 in investible assets held at least three-quarters of them in cash, rather than investing. The FCA wants to see more people holding mainstream investments to potentially improve their long-term returns.
The value of investments can go down as well as up.
Looking towards retirement, the research found that a third (33%) of adults with a defined contribution (DC) pension have less than £10,000 saved.
As part of its new strategy, the FCA is working to improve access to help, guidance and advice, at a cost people can afford, to make informed decisions for their financial future.
It has also introduced the Consumer Duty, requiring firms to put customers at the heart of what they do, including when designing products and communicating with customers. The duty has a strong focus on positive consumer outcomes.
Sarah Pritchard, executive director of consumers and competition at 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.
“But there are improvements – more people with current accounts and less digital exclusion. Our strategy will build on this to help people better navigate their financial lives.”
The report also found that in the 12 months to May 2024, around one in seven (14%) adults experienced a fraud related to banking, payments, pensions and/or investments, the FCA estimated.
Card fraud was the most common, the research indicated, followed by “money muling” and authorised push payment (APP) fraud – when someone is tricked into transferring money to a fraudster.
For most experiences of a fraud or scam (71%), adults reported it, mainly to their account provider and also sometimes to the police.
To combat scams, seven in 10 (72%) adults reject or ignore unsolicited contact, nearly two-thirds (68%) regularly check bank and credit card statements, and 62% ignore unexpected website links.
However, far fewer check whether financial firms are FCA-authorised (27%) or monitor their credit reports for unusual activity (26%).
Rachael Griffin, tax and financial planning expert at Quilter, said: “The FCA’s Financial Lives Survey lays bare the financial tightrope that millions are walking.”
She added: “With rent, childcare and food costs still elevated, the capacity to save is being squeezed from all sides.”
Claire Exley, head of financial advice and guidance at JP Morgan-owned wealth manager Nutmeg, said: “If you’re not sure if your retirement savings are on track then speaking to an adviser about your retirement lifestyle goals, reviewing your employer’s auto-enrolment policy to maximise contributions and tax relief, and consolidating smaller workplace pension pots are all options to consider.”
Oliver Morley, chief executive at the Government-backed Money and Pensions Service – which provides MoneyHelper, said: “Through MoneyHelper – our free and impartial service – we can help make your money and pension choices clearer by cutting through the complexity, explaining what you need to do and how you can do it.”
Pete Glancy, head of policy at Scottish Widows, said: “Helping people build a financial buffer through better engagement and support will not only improve financial wellbeing and resilience, but also make it less likely that they’ll give up on their pension contributions which are crucial to their future.
“Ensuring that there’s enough housing at an affordable level – whether people are renting or buying – will also help reduce household outgoings during both working life and then in retirement.”
Helen Undy, chief executive of the Money and Mental Health Policy Institute, said: “Our own research shows that people with mental health problems would be twice as likely to struggle to make ends meet if they lost their main source of income.
“And while it’s encouraging to see that more people are accessing bank accounts, many people with mental health problems still face an uphill battle when using these services, struggling to speak to specialist teams, understand terms and conditions or resist offers of new credit.”
