Financial Lives 2022 survey - Key findings from the May 2022 survey: Executive summary

In May 2022, 12.9 million UK adults had low financial resilience. Adults are described as having low financial resilience if they are in financial difficulty because they have missed paying domestic bills or credit commitments in 3 or more of the previous 6 months; because they could quickly find themselves in difficulty as they are heavily burdened by their existing commitments, or because they have very limited savings.

The rising cost of living in 2022 had a significant financial impact on the financial lives of many adults in the UK, as Figure ES.1 highlights. For example, the proportion of adults in financial difficulty went up from 8% (4.2m) in May 2022 to 11% (5.6m) in January 2023. The number of adults finding it a heavy burden to pay these bills also increased – from 15% (7.8m) in May 2022 to 21% (10.9m) in January 2023. 

This also means that, in total, those in financial difficulty and/or finding it a heavy burden to pay their bills went up from 18% (9.6m) to 24% (12.8m) over the same period. 

Other results showing that the financial circumstances of adults around the UK worsened in the 6 months to January 2023 include:

• 77% (40.9m) of UK adults felt that the burden of keeping up with their domestic bills and credit commitments had increased
   
• 70% (37.1m) had seen their financial situation worsen
   
• 71% (36.9m) either had no disposable income (15%) or had seen their disposable income decrease (56%)
   
• 29% (15.3m) had seen their unsecured debt increase
   
• 29% of adults with a mortgage in May 2022 and 34% of those renting in May 2022 had experienced payment increases – in total, therefore, 18% (9.6m) of UK adults had had mortgage or rent payment increases

We asked adults, after they had reflected on their financial situation overall, how they were coping financially. Over a third (36% or 18.9m) were not coping: 3% were not coping financially at all; 11% were finding it very difficult to cope, and 22% were finding it quite difficult to cope. Those struggling most included the unemployed, those in low-income households, adults from minority ethnic groups and renters.

In the 6 months to January 2023, more than half (56%) of UK adults had stopped saving or investing, had reduced how much they were saving or had used their savings to meet their daily expenses, due to the rising cost of living. This equates to 29.4 million people.

In May 2022, slightly less than half (46%) of all UK adults were making pension contributions or their employer was contributing on their behalf.  However, in January 2023, 6% of these adults reported that they had either stopped contributing entirely or had reduced their contributions in the past 6 months, attributing this to the rising cost of living. This amounts to 3% of all UK adults, or 1.5 million individuals.

We asked adults aged 55+, who had a DC pension in accumulation in May 2022, whether they had fully encashed their pension, or taken out a lump sum, to cover day-to-day expenses due to the rising cost of living in the 6 months to January 2023. Six percent had done so, equating to 1% of UK adults or 0.3 million people.

In the 6 months to January 2023, 1 in 8 adults (13% or 6.2m) who had held insurance or protection policies in May 2022 cancelled at least one of their policies (8% or 3.6m) and/or reduced the level of cover on at least one of their policies (7% or 3.1m), specifically to save money due to the rising cost of living.  

Compared with the national average of 13%, unemployed adults were 3 times (39%) as likely to cancel or reduce the level of cover on a policy. More women (15%) did so than men (12%). More renters (17%) did so than those who owned their home outright (9%). Those adults with a household income of less than £15,000 a year (19%) were twice as likely to do so as those with £50,000+ (10%). 

The most-commonly cancelled general insurance policies were mobile phone insurance (cancelled by 27% of those who cancelled a policy in the 6 months to January 2023), pet insurance (25%), gadget insurance (21%) and extended warranty (20%).

More than half of all UK adults (54%) – equivalent to 28.4 million people – reported feeling increased levels of anxiety or stress due to the cost of living. Just under 3 in 10 (28%) reported losing sleep because of money worries; nearly a quarter (24%) reported suffering with their mental health, and 15% had had relationship problems because of their money worries.

Those not coping financially at all or finding it very or quite difficult to cope reported the worst results:  86% had increased levels of anxiety or stress due to the cost of living; 63% were losing sleep because of money worries; 53% were suffering with their mental health, and 33% had had relationship problems because of their money worries.

Those not coping financially were also more than twice as likely as the UK average to put off dealing with financial matters, for example by ignoring warning letters or not opening correspondence (24% vs. 10% of all UK adults); to be less productive at work or to have had to take time off due to money worries (17% vs. 8%); and to have avoided speaking to their lenders about their finances or debts (17% vs. 7%).

Around half (53%) of adults said they did not use customer support services in the last 12 months. Of those who did, 84% agreed that it helped them achieve what they wanted to do – as Figure ES.2 shows.

Adults with one or more characteristics of vulnerability were more likely to report that customer support services did not help them at all to achieve what they wanted to do. For example, 20% of those with low financial resilience and 20% of those with low capability reported that provider communications did not help at all, compared with 12% of those with no characteristics of vulnerability.

Not all adults were able to contact their provider or get the support they needed. In the 12 months to May 2022, 14% of adults who held one or more financial products – or 7.4 million people – unsuccessfully attempted to contact one or more of their financial services providers. 7% (3.6 million) were able to contact one of their financial services providers but could not get the information or support they wanted. 

Many of the problems experienced by consumers relate to customer services, such as poor customer service, IT system failures or service disruption, sales pressure, provider making errors or not following instructions, delays when making changes to an account or when arranging an account, or having unsuitable channels to contact the provider. Retail investment product holders were the most likely to report problems about customer service (11% or 2.2m), followed by those with a day-to-day account (10% or 5.2m) and those with consumer credit regulated agreements (10% or 4.1m).

Shopping around for financial services products can help consumers ensure they are getting the best deal or most appropriate product for their circumstances. Over two-thirds (68%) of adults said they always or usually shop around for insurance products. Far fewer (44%) reported doing the same for other financial products, such as current accounts, savings accounts and ISAs.

We asked consumers, who had shopped around before taking out their product in the last 3 years (or in the last 4 years for annuities and income drawdown), how easy or difficult it was to compare products from different providers. Most found comparing products straightforward. Shopping around for pet insurance got the highest score: 94% found this easy – 38% said very easy, and 56% said fairly easy. Ratings were lowest for annuities and income drawdown. Shopping around for income drawdown got the lowest scores: 68% found this easy – 20% said very easy, and 48% said fairly easy.

The Consumer Duty is also designed to tackle products and services that do not achieve fair value outcomes for consumers. In May 2022, 10% of UK adults reported having been offered in the previous 2 years a financial product or service by a provider at a price, or with terms and conditions, they felt were completely unreasonable. We also asked product holders to tell us whether, in the previous year, they had had a problem related to fees and costs they felt were not reasonable. Retail investment consumers were the most likely to report unreasonable fees and costs about any of their products (4% did so), followed by those with consumer credit regulated agreements (3%), and by general insurance or protection policy consumers (2%).

Good communications from and with financial services providers are important to help consumers make informed and timely decisions about their financial products. Just over half (51%) of adults said they did not receive any communication in the 12 months to May 2022 to help them make a decision.

Figure ES.3 shows that among the people who had used provider communications to help them make a decision in the year to May 2022, most (73%) found doing so helped. This equates to 13.4 million people. However, the survey shows that for just over a quarter (27%) of adults who had used provider communications to help them make a decision in the 12 months to May 2022 the communications did not help at all. This equates to 4.9 million people. 

Adults with one or more characteristics of vulnerability who had used provider communications to help them make a decision were more likely to report that it did not help (32%), compared with those with no characteristics of vulnerability (19%). This rose to 40% of those with low financial resilience and to 37% of those with low capability.

Over the same period, the 12 months to May 2022, 4.3 million people received information from their provider that they could not understand, was not what was needed or was not timely.

The Consumer Duty places the onus on firms to provide communications that meet the needs of their customers.

We cover just over 100 different products or groups of products in the survey. Appendix A (Product holdings) includes a spreadsheet which shows the proportions and numbers of UK adults holding them for 2017, 2020 and 2022. 

There has been relatively limited change across product holdings since 2017. However, there are some significant increases and decreases. The increases are in those holding a current account with an e-money institution; in those with an active current account with a digital bank; in those holding investment products (particularly cryptoassets); in non-retirees with a pension in accumulation and in non-retirees currently contributing to a pension, and in the use of any credit or loans. The decreases are in those holding travel insurance policies; in those holding savings accounts and cash ISAs, and in the use of high-cost credit. We now describe these changes in turn, in more detail.

In the current account market, there has been a five-fold increase in the use of current accounts from e-money institutions since 2017 – from 1.3% (or 0.7m) in 2017 to 6.6% (or 3.5m) in 2022. In 2022, use was particularly prevalent among men aged 25-44 (14%), minority ethnic adults (11%) and those with a personal income of £50,000 or more (11%). Far more adults held a current account with a digital bank in May 2022 than did so in 2017 – 11% had an active current account with a digital bank in 2022, compared with less than 0.5% in 2017.

In 2022, 70% of adults (37.1m) had a savings account of any type, down from 72% (36.5m) in 2017. While the most widely held savings products in 2022 were still savings accounts with a bank, building society or with NS&I (held by 54% of UK adults) and cash ISAs (28%), both have declined in popularity since 2017 (59% and 37% held these in 2017, respectively). In contrast there has been a large increase in the popularity of Premium Bonds, with 26% (13.9m) holding these in 2022, up from 21% (10.6m) in 2017.

In contrast to the downward trend seen in the savings market, the proportion of adults holding investment products has increased. In May 2022, 37% of adults (19.5m) held any investment product (excluding investment property and other real investments), up from 29% (14.6m) in 2017. Direct holdings of shares and equities remained by far the most commonly-held investment products in 2022. The overall number of adults holding these investments has increased since 2020: by 1 percentage point for shares and equities (from 20% to 21%), and by 3 percentage points for stocks and shares ISAs (from 14% to 17%). There was an almost threefold increase in the proportion of adults holding cryptoassets between February 2020 and May 2022: from 2.0% (1.0m) to 5.8% (3.1m).

Since the pandemic, there has been a significant increase in the number of younger adults investing. For example, in February 2020, just one-fifth (19%) of 18–34 year olds had investments – by May 2022, this proportion had increased to three-tenths (29%). On average, new young investors tend to have higher risk appetites than other investors. For example, 16% said they have a moderate to high willingness to take risk when investing, compared with just 4% of new investors aged 55+ and 12% of all investors. Almost half (46%) of them held cryptoassets, two-fifths (41%) had direct holdings of stocks and shares, and over one-third (36%) had a stocks and shares ISA.

The use of credit was high in 2022. Over four-fifths of adults (83% or 44.0m) held at least one credit or loan product in May 2022 or had done so at some point in the previous 12 months. This is up from 78% (39.6m) in 2017. Use of high-cost credit, however, had declined – 5.2 million adults (10%) had a high-cost loan in May 2022 or had had one in the previous 12 months. This was down 2 percentage points from 2020 (12% or 6.2m).

We asked about deferred payment credit (DPC) (this is often referred to as ‘Buy Now, Pay Later’ but is currently unregulated by the FCA) for the first time in our 2022 survey. 8.8 million adults (17% of all adults) used DPC in the previous 12 months. DPC use was higher for 25-34 year olds (27% used), Black adults (25%), renters (25%) and women (19%).

There was relatively little change in the mortgage market. Around three in ten adults (28%) had a residential mortgage in their own name or joint names in May 2022. This compares with 29% in 2020 and with 31% in 2017. Considerably more residential mortgage holders had a fixed rate mortgage in 2022 (77%), up from 62% in 2017 and 72% in 2020.

Just over 1% of adults had a lifetime mortgage in May 2022, up from 0.3% in 2017. However, this is still small compared with the number of adults aged 55+ who owned their property outright in May 2022.

Auto-enrolment has increased pension take-up. Overall, 57% of all UK adults (29.9m) had a pension in accumulation in 2022, 6 percentage points higher than in 2017 (51% or 25.9m), but unchanged since 2020 (57% or 29.6m).

The proportion of people holding any insurance product decreased from 86% in 2020 to 84% in 2022. There was also a notable reduction in the proportion of those holding travel insurance policies, compared with February 2020. This reflects the impact Covid-19 had on the tourism industry and the fact that tourism numbers have not yet returned to pre-pandemic levels.

In May 2022 there remained a significant protection gap. Just over half (53%) of all adults did not hold any protection products at all, down 1 percentage point from 2020 (54%). In 2022, the protection gap was most prevalent among those aged 18-24, unemployed, with a household income of less than £15,000 a year, renting, single, with low or no confidence in managing their money or with characteristics of vulnerability.

12.1 million adults (ie 23% of all UK adults) had different kinds of problems accessing a financial product or service in the 2 years to May 2022:

• 3.8 million adults (7%) were refused one or more financial products or services – unchanged from February 2020 (3.4m or 7%)
   
• 5.2 million adults (10%) were offered one or more financial products or services at a price, or with terms and conditions, they felt to be completely unreasonable – up from February 2020 (3.5m or 7%)
   
• Not all of these 5.2 million people got the product or service they wanted. For example, 33% of the adults offered a credit or loan product at a price, or with terms and conditions, they felt to be completely unreasonable accepted the offer; 20% shopped around and found a better offer from another provider, and almost half (46%) declined the offer
   
• 6.8 million adults (13%) avoided applying for a financial product or service because they thought they would not be eligible, they would not be able to afford the product or their application would be rejected – this result was captured for the first time in the 2022 survey

The proportion of adults without a current account dropped from 2.5% in 2020 to 2.1% in 2022.

Most consumers are switching away from traditional channels in favour of digital solutions in banking. Branch use has declined significantly. In the 12 months to May 2022, just 33% of adults with a day-to-day account carried out banking activities face to face in a branch, down from 63% in 2017. Despite this, use remains higher among older adults: for example, 50% of adults aged 75+ with a day-to-day account carried out banking activities face to face in a branch in the 12 months to May 2022, down from 82% in 2017.

Online and mobile banking has increased significantly in popularity since 2017. Almost 9 in 10 (88%) adults banked online or using a mobile app in 2022, up from 77% in 2017. However, this also means that there were 5.7 million day-to-day account holders in May 2022 who did not bank online or use a mobile app. Adults most likely to be in this group included older adults aged 75+, those who were digitally excluded, heavy users of cash and those who did not have a smartphone.

Over three-quarters (78%) of adults used a cashpoint to withdraw money or check their balance in the 12 months to May 2022. Since 2017, there has been a decline in cashpoint use among adults aged under 55 (79% in 2022, compared with 90% in 2017), but an increase in use among adults aged 55+ (78% and 74%, respectively).

Innovation and new technology appear to be making digital payments easier than ever for consumers of all ages. In May 2022, 91% had made a contactless payment in the previous 12 months, up from 63% in 2017.

The use of mobile wallets is also growing rapidly. This payment method was used by almost half (47%) of all adults in the 12 months to May 2022, up from just 14% in 2017. Mobile wallets were far more likely to be used by younger adults aged 18-34 (74%) than by adults aged 55+ (23%), and by men (52%) than women (43%).

Payment Initiation Services allow users to make payments directly from their bank account, rather than using a card provided by a third-party such as Visa or MasterCard. In May 2022, less than 1 in 10 (7%) UK adults were aware that they had used these services to pay for something online in the previous 12 months.

In May 2022, 1.6 million adults (3%) said they had used cryptocurrency to pay for goods or services. A further 7.8 million adults (16%) had not ever done so, but they said they would consider using cryptocurrency as a method of payment in the future.

Cash remains a vital payment method for some. In May 2022, 3.1 million adults (6%) paid for everything or most things in cash in the previous 12 months. Nearly 6 in 10 (58%) of these heavy users of cash cited convenience as a reason for how much they use cash; half (50%) gave budgeting reasons, and just under half (47%) cited trust or privacy reasons. Use of cash was highest among digitally excluded adults (26%, compared with the national average of 6%), those aged 85+ (19%), those in poor health (15%), those with low financial capability (12%) and those with low financial resilience (11%).

A lack of trust and confidence can result in consumers not engaging with the financial services industry, or in failing to address their own financial needs. In May 2022:

• only 41% of adults had confidence in the UK financial services industry – unchanged from 2020 and up from 38% in 2017
   
• just 36% agreed that most financial firms are honest and transparent in the way they treat them, up from 34% in 2020 and from 31% in 2017

Similarly, trust in the different retail financial sectors remains low across all groups. In both 2022 and 2020 banks came out top, although they were trusted highly only by 1 in 5 adults in 2022 (20%) and in 2020 (19%). Levels of trust were lower (and in the same descending order for both 2022 and 2020) for mortgage lenders, pension companies, credit card companies, financial advisers and insurance companies. Only 7% of adults expressed high trust in insurance companies in 2022, unchanged from 2020 (7%).

A more positive picture emerges in 2022, as it did also in 2020 and 2017, when consumers rate their own providers. People have higher levels of trust in their own provider than they do in the sector in general. For example, in May 2022, 11% of adults expressed high trust in mortgage lenders, yet 54% of adults with a mortgage had high trust in their own mortgage provider.

Achieving good outcomes for consumers through the Consumer Duty will help build trust, confidence and participation in financial services –  a benefit to business, the economy and productivity.

In the 12 months to May 2022, 6.6 million adults (13% of those with a day-to-day account) suffered one or more types of actual or potential banking fraud.

Our 2022 survey improved how we collected banking fraud data. As a result, we do not have a directly comparable statistic for 2020. However, we can look at the trends for some types of fraud. For example, in the 12 months to May 2022:

• 2.6 million had their debit, credit or other card(s) used without their permission to take cash from their account. In 2020, 2.3 million adults had any account or card used without their permission.
   
• 0.8 million adults had money taken from their account in some other way which involved their personal details being used without their permission. In 2020, this figure was 1.0 million.
   
• 1.6 million were asked to share their online account log-in details, typically involving someone pretending to be their account provider, up from 1.2 million in 2020.
   
• 1.3 million experienced Authorised Push Payment (APP) fraud, not statistically different to the 1.1 million who experienced APP fraud in 2020.
   
• 2.2 million were contacted by an individual or company with a request to transfer money through their account, unchanged from 2020.
   
• 0.5 million adults paid a fee in advance to a get a financial product or service that they did not receive. We did not include this question in the 2020 survey.

The Financial Lives survey also explores instances of unsolicited approaches made to people in the previous 12 months involving investments, pensions and retirement planning. We do not know whether these unsolicited approaches were scams, but they might be.

A total of 4.7 million people (9% of all UK adults) received one or more unsolicited approach in the 12 months to May 2022. This is significantly lower than in 2020 (9.3 million or 18%) or 2017 (11.3 million or 22%). This decline coincides with the introduction, in 2019, of a ban which prohibited cold calling about pensions.

All consumers are at risk of becoming vulnerable but this risk increases if they display characteristics of vulnerability.

In 2017, 51% of UK adults (26.0m) showed one or more characteristics of vulnerability. By February 2020 this proportion had fallen to 48% (25.1m). By May 2022 it had fallen again slightly to 47% (24.9m), although this change was not statistically significant.

In this report, we group characteristics of vulnerability into the 4 drivers used in our Finalised guidance: poor health, negative life events, low resilience, and low capability. Figure ES.4 shows the proportion of adults who had one or more characteristics of vulnerability under each of the 4 drivers of vulnerability.

The fall from 2017 to 2020 was driven primarily by a reduction in the number of older people who were digitally excluded, which is a low capability characteristic. Between 2020 and 2022 the proportion of adults with low financial resilience increased by almost 2 percentage points (from 22.8% in 2020 to 24.4% in 2022), while the proportion of digitally excluded adults decreased by a similar amount.

Vulnerability statistics are helpful in identifying the many adults with different characteristics of vulnerability struggling to interact with financial services. Examples from our May 2022 include:

• Adults with poor mental health: 40% said they struggled to cope with managing their money; 39% found dealing with customer services on the phone confusing or difficult; 34% were too anxious to shop around for financial products and services in case they made a mistake; 33% put off dealing with financial matters, such as ignoring warning letters, and 28% had fallen into debt because they had not wanted to deal with difficult financial situations.
   
• Adults who had a relationship breakdown in the 12 months to May 2022: 19% struggled to cope with managing their money, and 12% had fallen into debt because they did not want to deal with difficult financial situations.
   
• Adults with low financial capability: 47% said they felt overwhelmed and stressed when they have to deal with financial matters or interact with financial services providers; 34% found dealing with customer services on the phone confusing and difficult; and 15% said they have difficulty dealing with providers as they do not make reasonable adjustments for their specific needs. 

Comparing results for those with and without characteristics of vulnerability shows that those in vulnerable circumstances have poorer outcomes and are more likely to experience harm. Examples for May 2022 include:

• Being less likely to have private pension provision: 86% of employees with no characteristics of vulnerability had some private pension provision. Yet the same was true of just 64% of employees in poor health, 70% with low capability and 72% with low financial resilience.
   
• Being more likely to have high-cost credit and loans: 10% of UK adults had these in May 2022. This rises to 14% of adults with characteristics of vulnerability, and to 18% of adults with poor health and 21% with low financial resilience.
   
• Being less likely to use digital banking services and to switch providers if you have low financial capability: almost 9 in 10 (88%) adults banked online or were using a mobile app in 2022 – 79% adults with low financial capability did so, compared with 89% of everyone else. Just 32% of home contents and buildings insurance policyholders with low financial capability had switched provider in the 3 years to 2023, compared with 51% of those who do not have low financial capability.
   
• Being less likely to take precautions against fraud: 68% of adults with no characteristics of vulnerability always or sometimes do each of the following – covering their PIN when withdrawing money from a cashpoint or using their bank or credit cards to pay for goods; disposing securely of their statements and documents that contain information about their financial affairs; checking an internet site is secure when giving their bank or credit card details, and checking their statements for unfamiliar transactions. In comparison, 54% of adults in vulnerable circumstances did this. This drops to 42% of adults with low financial capability.
   
• Being less aware of the FCA and our consumer helpline: 73% of adults with no characteristics of vulnerability were aware of the FCA and 36% were aware of our consumer helpline, compared with 56% and 24%, respectively, of adults in vulnerable circumstances. 

The Consumer Duty will require firms to consider the range of needs in their target market, including characteristics of vulnerability, and to factor this in to how they design and sell products and services to their customers. For example, this should improve the situation for consumers with characteristics of vulnerability being unable to access and use a product or service properly because the customer support is not accessible to them.