On 20 October 2020, the FCA published Occasional Paper No. 58: Understanding consumer financial wellbeing through banking data. In this Occasional Paper, the authors integrate two approaches by investigating the relationship between subjective financial wellbeing, measured by self-reported responses of survey respondents, and objective financial wellbeing, measured by the same respondents’ bank account data. This approach is an example of a ‘matched dataset’, giving regulators and policy bodies a much richer perspective on consumer outcomes. The objective of the Occasional Paper is to better understand how differences in subjective financial wellbeing, consumers’ lived experience, fluctuates with the objective state of their finances. 

The Occasional Paper finds that subjective financial wellbeing is correlated with a number of objective metrics that can be straightforwardly derived from bank account records, such as income, available liquidity and overdraft usage. People with higher incomes, more liquidity and fewer days in overdraft report higher financial wellbeing. By contrast, the Occasional Paper does not find associations with demographic characteristics like gender and age. It also finds no relationship between income volatility and subjective financial wellbeing – those with greater fluctuations in monthly inflows into their accounts do not report lower financial wellbeing. The Occasional Paper does find that account balance volatility is negatively correlated with wellbeing and that spending volatility is positively correlated with wellbeing. The Occasional Paper considers an explanation that can reconcile these results, where lower subjective wellbeing derives from mismatches in the timing of income and expenditure.