The UK is, as a whole, more prosperous than it was 10 years ago, but the gap between the wealthiest and the poorest continues to widen. Key Note set out to review the financial needs of the wealthiest socio-economic groups, mainly the ABs, and to assess how well financial services companies are meeting their financial requirements — which are not necessarily the same as society’s
long-term financial needs. The NOP research is new for this report. Key Note asked people about their ownership of and attitudes towards financial products, and compared the findings with the survey carried out 2 years ago. Financial products help people to manage their money and prepare for future emergencies or commitments, such as illness or retirement. They include insurance for homes and belongings, and against unemployment or illness, as well as savings, investments, mortgages, loans and rolling credit.

Key Note asked whether people’s borrowings, excluding mortgages, are greater than their savings. The findings have revealed widespread debt, even among ABs, particularly in London and the South. There appears to be relatively little scope for expanding the credit card market, and companies’ efforts tend, therefore, to be focused on persuading people to switch from one card issuer to another.

The survey indicates a fall in the penetration of savings accounts since 1999, which reinforces the statistics showing the low level of household savings in the UK. The decline appears to be particularly acute among the under-25s. Even the proportion of ABs with savings accounts has declined slightly, and holdings of ISAs, PEPs and TESSAs have hardly changed since 1999. Financial services companies are advertising ISAs strongly, but are having more success in persuading customers to switch between providers than they are in expanding the market.

A surprisingly large number of ABs do not have private health insurance, so there is still scope for market expansion. The number of people with home buildings insurance and contents insurance appears to have fallen since 1999. Pension contributions are not popular, and the proportion of workers contributing more than £50 a month to their pension appears to have declined. The number of people making no contributions at all is startling, and there is virtually no interest at all in stakeholder pensions.

ABs are polarising occupationally and geographically to urban services in the main conurbations and in the plush commuter belts of the South. They are becoming richer in relation to the overall population, but cannot continue to do so without risking political pressure for greater redistribution to the less affluent. ABs retain more immunity than other groups to global pressure pushing wages down towards the levels in developing economies, in services as well as manufacturing. They are not, however, wrapped in a cocoon. Many will seek to maintain their living styles through an even greater use of credit, which represents quite a challenge for financial services companies.