A tenth of young adults shun cash and rely instead on cards and digital payments for their day-to-day spending, figures suggest.
More than one in 10 people aged between 25 and 34 used notes and coins no more than once a month last year, according to UK Finance.
The trade body for financial providers said nearly three million people rarely used cash.
But, across all age groups, cash remains the most popular way to pay.
The figures show that 6% of the UK’s adult population used cash no more than once a month last year, but this increased to more than 10% for 25 to 34-year-olds. The proportion drops to 2% for 55 to 64-year-olds.
At the opposite end of the scale, 5% of the UK adult population (2.7 million people) relied almost entirely on cash to make their day-to-day payments during 2016, UK Finance said.
This was relatively evenly spread across different age groups. However, people with lower household incomes were far more likely to rely mainly on cash compared with their more affluent counterparts.
More than half of all consumers who relied predominantly on cash during 2016 had total household incomes of less than £15,000 per year.
Cash accounted for 44% of all payments made by consumers across the UK last year.
Tens of thousands of pensioners who were sold the wrong type of annuity with two of the UK’s biggest insurance companies are to receive compensation.
Some estimates say that up to 200,000 pensioners – some of whom are unwell – could typically receive £2,000 each. Prudential and Standard Life have agreed to review hundreds of thousands of policies, which go back to July 2008. Standard Life has set aside £175m to cover the compensation programme. Analysts have said that Prudential is likely to have to pay at least £200m.It follows an investigation from the Financial Conduct Authority (FCA), which concluded that between 39 and 48% of those sold annuities by both companies were provided with “insufficient information”.
Many of those people may have qualified for so-called enhanced annuities. Enhanced annuities pay consumers a higher income, on the basis that they are in ill health and are likely to live for a shorter period than average. Those who bought standard annuities instead would have lost up to £240 a year in pension income, according to FCA estimates.
In October 2016, the FCA estimated that 90,000 may have been sold the wrong annuities, but industry experts believe the final figure will now be higher. Some of those sold the policies are likely to be in their 70s and not in good health. Nevertheless, Prudential said it would take two years for them to go through all the cases. Standard Life said that most cases should be settled by the end of 2018. “It is deeply disappointing that it has taken this long,” said Tom McPhail, head of retirement at Hargreaves Lansdown.
The policies in question were “non-advised”, meaning the customers took no independent advice and did not shop around for an alternative provider. Earlier this week, the FCA said that 58% of those who buy an annuity – or income for life – did so from their existing provider. “The way to avoid this situation arising in the future is for customers to shop around on the open market,” said Mr McPhail. “Worryingly, FCA data published only yesterday shows that over half of investors retiring today are still buying their retirement income arrangement from their existing pension provider, which begs the question as to whether the problem has actually been fixed.”
US President Donald Trump has taken his first step to try to scale back US financial services regulations.
He signed an executive order to review the 2010 Dodd-Frank financial regulations, which some people on Wall Street say are overly-restrictive. The law was brought in after the 2008-09 financial crisis with the aim of avoiding another financial meltdown. “Dodd-Frank is a disaster,” Mr Trump said earlier this week. He added: “We’re going to be doing a big number on Dodd-Frank.” Mr Trump made it a campaign pledge to repeal and replace the Dodd-Frank act, which also created the Consumer Financial Protection Bureau (CFPB). This US government agency seeks to make sure banks, lenders, and other financial companies treat US consumers fairly. Dodd-Frank, named after the Congressmen who campaigned for the legislation, was introduced to rein in banks’ risky practices by banks and other financial companies. Democrat congressman Jim Himes told the BBC: “Dodd-Frank of course was the legislative response to the economic carnage that came about because of the financial meltdown of late 2008. “Much of the legislation… is designed to get at those things which went horribly wrong, that is to say, problems in the mortgage market” he said.
Good move, bad move
But Trump administration officials have said Dodd-Frank did not achieve what it set out to do, and argue that is an example of government being overly-controlling. News that a review was imminent sent banking shares higher on Wall Street and on the main stock markets in Europe. Goldman Sachs and JP Morgan Chase rose 4% and 3% respectively. “The banks are going to be able to price products more efficiently and more effectively to consumers,” Gary Cohn, an adviser to Mr Trump and a former Goldman Sachs executive, told the Wall Street Journal. Market analyst Jasper Lawler at the London Capital Group said that “unwinding some of Dodd-Frank is a good thing because it will enable smaller community banks to compete, offering competition to consumers.” But he said that scrapping the whole of Dodd-Frank “puts the entire system at risk of a repeat of 2008”. And Sweden’s minister for financial stability Per Bolund told the country’s TT news agency that a repeal would be “dangerous, harmful and extremely unfortunate”.