Financial inclusion annual monitoring report 2015

1. Context
2. The study
3. Key findings
4. Points to consider

Context

This report is the third in a series of five annual monitoring reports commissioned by the Friends Provident Foundation to measure changing levels of financial inclusion in Britain from 2013–2017. The series of reports argue that three components are needed to achieve financial inclusion, which are:

• A secure income that meets a minimum standard;
• Access to appropriate and well-regulated financial services, particularly transactional bank accounts, savings accounts, affordable credit, pensions and insurance products and;
• Access to free and appropriate advice and education, particularly for those with debt problems.

The study

Friends Provident Foundation commissioned the University of Birmingham to conduct the research. Focusing on the British context, the research involved three stages, which were:

• Stakeholder engagement. This involved discussing the scope of the research with stakeholders, at a workshop in 2012 and an event in 2013;
• Secondary analysis of existing data sources (primarily the Wealth and Assets Survey, Family Resources Survey, British Household Panel Survey, data on credit and debt and Labour Force Survey) and;
• A module of questions on an Ipsos MORI omnibus survey in 2013, 2014 and 2015. 967 adults completed the survey in 2013, 981 in 2014 and 996 in 2015.

Key findings

• Overall unemployment continued to fall in 2014, however issues of underemployment and youth unemployment remain. Labour market insecurity remains high and average hourly wages are still lower than before the recession.
• In order to make ends meet the majority of the population were cutting back on spending in 2015 and the number of people accessing emergency food and support has risen dramatically.
• Overall, fewer people are without access to any kind of bank account than ever before, but there is little data on types of account and how they are used.
• Just over half the population had enough money set aside in 2015 for emergencies and only 28% of respondents said they would be able to meet an unexpected expense of £200 from their own money.
• In 2012/13, 43% of the population said they were saving for expenses other than regular bills, with those in the top 10% being three times more likely to be saving than those in the bottom 10%.
• The number of people saving in an occupational pension has increased for the first time in 30 years to 8.1 million and there have been increases in both private and public sector active pension membership. These increases are closely linked to changes in the pensions landscape.
• There seems to be a polarisation between a slowly growing number of people without any unsecured borrowing and a group of people with increasing amounts. Credit cards are the most common form of unsecured borrowing and there was a small increase in the number of people using credit unions.
• Insolvencies have fallen, as have mortgage possessions.
• The proportion of households with home contents insurance has declined slightly, largely due to lack of affordability.

Points to consider

• Methodological limitations: the authors highlight that the number of sources and different methodologies for data on borrowing and problem debt make trends difficult to measure. In addition, they note that these sources are considerably out of date.

Full report

Financial inclusion annual monitoring report 2015 - full report