People living in urban areas are less satisfied with their overall financial position, are more likely to use high-cost loans and, on average, have more unsecured debt, an authoritative new study has shown.

Financial Lives is a survey of nearly 13,000 adults in the UK, carried out by the Financial Conduct Authority (FCA) and is the largest tracking survey looking at consumers and their use of financial services.

The research found significant differences between those living in cities, and those in more rural areas, both in terms of overall indebtedness and access to services. The two groups also appear to use financial products very differently, which poses significant challenges to policymakers and financial services providers.

Those in rural areas say they have more difficulty getting to a bank branch and are less likely to use mobile banking. They are, however, more likely to be satisfied with their overall financial circumstances.

Andrew Bailey, chief executive of the FCA, said: “This survey shows just how different the experience of financial services is for consumers across the country. That’s important for us, as we shape financial services policy. But it is also important for firms, as they decide how best to serve their customers.”

The main findings of the FCA Financial Lives report are:

Difficulty getting to a bank – In rural areas, a higher than average proportion of adults (13%) aged 55 and over, or who are younger and have a long-term health condition, have difficulty getting to a bank. This compares to 9% in urban areas.

Mobile banking – Among those UK adults who never use the internet, 70% (or 3.7 million people) live in rural areas. The take-up of mobile banking in rural areas (23%) is much lower than in urban areas (45%).

Costly debt – There is a higher concentration of adults with high-cost loans in urban areas (7% or 2.4 million people) than in rural areas (5% or 0.6 million people). Adults’ average unsecured debt is £3,600 in urban areas, compared with £2,510 in rural locations. Those paying for credit are more likely to be in urban areas (49%) compared with rural areas (37%).

Low income – Over half (51%) of retired people in rural areas rely on the State Pension as their main source of income, compared to 37% in urban areas.

Money worries  – 27% of adults in rural areas are highly satisfied with their financial situation, compared with 20% of adults in urban areas.

Capital woes – Satisfaction in London is particularly low with just 16% being highly satisfied with their finances, compared with the national average of 21%.

Regional vulnerabilities

The survey also showed that some parts of the country are struggling with financial pressures and high levels of debt.

People in the North West are most financially vulnerable – 55% show worrying signs compared to 46% in the South West.

Adults in London have the highest levels of over-indebtedness – 17% – compared to 15% across the UK.

Those living in Yorkshire and the Humber are most likely to describe themselves as being ‘in difficulty’ (11% compared to the UK average of 8%).

Savings crisis

Just over one in ten adults (13%) have no savings.

The report also shows there is a clear North-South divide with more people in the North having no savings. 17% of people in the North West and 16% in the North East have no savings compared to 9% in the South East and 10% in the South West.

The generation gap

The vast majority (90%) of UK adults use the internet. Two thirds (67%) use the internet at least once a day, 10% use it most days, and 12% use it less often. Virtually all adults aged 18-44 use the internet. In contrast, just under two thirds (65%) of those aged 65 and over, and one in three (29%) of those 85 and over are internet users.

Saving and borrowing by age group

An interim report produced by the FCA in October last year confirmed that the experience of borrowing, saving and employment is very different among the generations.

18 to 25

For those aged 18 to 25, the FCA survey found 17% were over-indebted and 52% showed characteristics of potential vulnerability.

Their satisfaction with their overall financial circumstances was among the lowest of any age group, although they were the most technically savvy.

Among this group, 27% have used a mobile wallet – Apple Pay, Samsung Pay, Android Pay, etc. – in the last 12 months. Just 30% have confidence in the UK financial services industry, which may help to explain a reasonably high (58%) preference for sticking with a known brand.

25 to 34

For those aged 25 to 34, even more were over‑indebted (23%). Within this group, 65% worked for an employer full‑time and 48% were renting. Their mean personal income was £34,000, mean cash savings were £11,000 and 85% had no investments.

This group makes up one quarter of motor finance holders (23%), personal loan holders (24%) and credit card revolvers (25%), and one third of them have a student loan.

They also account for 29% of short‑term instalment loan holders, as well as 37% of all payday loan holders.

Excluding student loans, their mean debt levels are almost three times that of 18‑24 year olds, (£4,200 compared with £1,460).

They are far more likely to have been overdrawn in the last 12 months than all other adults.

Aged 35 to 44

This group has higher than average household incomes (mean of £56,000, compared to £46,000 for all UK adults).

They also tend to own property – 59% are buying with a mortgage or loan, the highest proportion of any age group. They also have the highest amount of outstanding mortgage debt of any age group: 50% owe from £100,000 up to £250,000, and 11% owe more than £250,000 on their mortgage.

Adults age 65 and over

Among this group, 35% never use the internet. Compared to other groups, levels of debt have diminished considerably – 83% have no unsecured debt.

However, there is some concern about those who have not paid off their mortgage – 11% of all adults with an interest‑only mortgage are aged 65 and over.

Now read about FCA’s new rules for persistent credit card debt – or our complete guide for getting out of debt