The financial circumstances of huge numbers of rural residents make them potentially vulnerable, finds Brian Wilson.

Last year the Financial Conduct Authority, which is the statutory body that regulates financial services, carried out a Financial Lives Survey. In June of this year (2018) it released a report – The Financial Lives of Consumers Across the UK – offering some geographic analysis of the survey results, including for rural areas.

This was a major survey, based on responses from 13,000 adult consumers who provided information about which of 90 financial products they did or didn’t hold. It also explored the potential financial vulnerability of those consumers. In some cases the results show notable differences between rural and urban consumers.

The report was not designed to tell us why these differences exist, though undoubtedly they were shaped by factors such as the older rural demographic, lower rural income levels and fewer rural adults having higher qualifications.

Indeed, the report found that twice as many adults were retired in rural areas (42% of all adults, compared with 23% in urban areas). It also found that 11% of rural residents were higher rate taxpayers, compared with 14% in urban areas, and that 23% of rural residents had no qualifications, compared with 12% in urban areas.

The headline rural finding is that over half (54%) of all rural consumers are potentially vulnerable in terms of their financial circumstances. This is defined as displaying one or more characteristics from: having limited financial resources; having low financial capability; having recently suffered a life event (such as redundancy, bereavement or divorce); or having a health problem which seriously affects day-to-day activities. Moreover, that rural figure is higher than its urban comparator (48%).

Rural retirees are also more likely to have the State Pension as their main source of income, this being the case for half of them (51%). Roughly two in three have some private pension provision and dependency on the State Pension is forecast to fall over the coming two decades, as the current group aged 45 plus reach retirement.

That may surprise some, given the end of many, traditional company pension schemes, but perhaps the introduction of auto-enrolment will turn the tide. So, too, might continued working past retirement age. Surely an important topic as the rural population ages?

One striking feature is how less likely rural consumers are to use internet or mobile banking. Just 54% use internet banking (72% in urban areas) and only 23% mobile banking (40% in urban areas). Whilst demographics may be influential here, so too surely must be access to broadband and reliable mobile networks.

The flip side is that rural consumers are greater users of bank branches and this despite sizeable closure programmes with the loss of many branches from our rural towns.

So where do rural consumers score relatively well? One such indicator is that they are less likely (than their urban counterparts) to be users of credit and more likely to pay off monthly credit card bills on a regular basis.

Equally, fewer rural consumers have been overdrawn in the last twelve months. For all that, it’s hard to overlook the fact that a fifth of them had an overdraft during that timescale and that an estimated 600,000 had taken out a high cost loan. Equally, that those in debt owe on average £9,570.

One probable reflection of demography is that rural consumers are more likely to have cash savings and investments than their urban counterparts. Only 9% held none whatsoever. Yet bear in mind that approaching half of those with savings or investments say they are worth less than £10,000. That is a thin comfort blanket for hard times or for things such as home improvements.

Which brings us to people’s satisfaction with their financial circumstances. Some readers will be unsurprised to learn that rural consumers are more likely to feel satisfied than their urban counterparts. Whether or not this matches up with the findings in the report I leave you to decide. Some might conclude that rural residents are simply more likely to express satisfaction with their lot.

What the figures in this report may also imply is a rural divide between the relatively affluent and the struggling. As ever, more questions are begged than answered. But congratulations nonetheless, to the Financial Conduct Authority for adding to the rural evidence base with this analysis.

This article was written by Brian Wilson whose consultancy, Brian Wilson Associates, offers policy research and support. He can be contacted at [email protected] Areas of specialism include rural policy and proofing, local economic strategies, public service delivery and neighbourhood plan support. He is a Director of Rural England CIC.