Contents:

Executive Summary 1. Introduction BACKGROUND The UK Population by Occupational Classification Table 1.1: The UK Government’s Former and Current Occupational Classifications, 2009 Table 1.2: The UK Working-Age Population by Sex and Occupational Classification — Current or Last Job (% and 000), Autumn 2005 Table 1.3: Estimated Size of Lower Income Groups in the UK Working-Age Population by Sex and Occupational Classification — Current or Last Job (000), First Quarter 2009 Sources of Information DEFINITION 2. Strategic Overview MARKET DYNAMICS Market Issues Market Status Table 2.1: Average Weekly UK Household Expenditure on Life Assurance and Pensions, Medical Insurance, Friendly Societies and Other Insurance, Savings and Investments, and Debt Consolidation Loans by Income Decile Group (£), 2007 DISTRIBUTION COMPETITIVE STRUCTURE ADVERTISING THE CONSUMER June 2006 June 2009 MARKET OUTLOOK Turnings Assets into Cash Short-Term Products KEY POINTS 3. Income Patterns INCOMES PEAK BEFORE AGE 50 Table 3.1: Average Weekly UK Household Income by Source and Age of Household Reference Person (% and £), 2004/2005 Table 3.2: Average Weekly UK Household Income by Source and Age of Household Reference Person (% and £), 2007 Table 3.3: Percentage Changes in Average Weekly UK Household Income by Age of Household Reference Person, 2001/2002-2004/2005 and 2004/2005-2007 INCOMES LAG IN OLD INDUSTRIAL CITIES Table 3.4: The UK Parliamentary Constituencies with the Lowest Median Annual Incomes (£), 2003/2004 and 2006/2007 LOW PENSIONS IN URBAN AND RURAL AREAS Table 3.5: The UK Parliamentary Constituencies with the Lowest Median Annual Pension Incomes (£), 2003/2004 and 2006/2007 SELF-EMPLOYMENT INCOME IS STAGNANT Table 3.6: The UK Parliamentary Constituencies with the Lowest Median Annual Incomes from Self-Employment (£), 2003/2004 and 2006/2007 WOMEN’S LOW INCOMES Table 3.7: Estimated Number of Taxpayers by Sex and Annual Income (000, % and number), 2006/2007 Figure 3.1: Estimated Number of Male Taxpayers by Annual Income (000), 2006/2007 Figure 3.2: Estimated Number of Female Taxpayers by Annual Income (000), 2006/2007 OCCUPATIONS WITH MODEST PAY PACKETS Table 3.8: The Occupations with the Lowest Median Weekly Earnings for Full-Time Male Employees in the UK (000 jobs, % of employees and £), 2005 and 2008 Table 3.9: The Occupations with the Lowest Median Weekly Earnings for Full-Time Female Employees in the UK (000 jobs, % of employees and £), 2005 and 2008 KEY POINTS 4. Household Wealth FEW ASSETS APART FROM HOMES Table 4.1: Net Wealth of the UK Household Sector by Type of Asset and Type of Liability at Constant 2007 Prices (£bn), 1991-2007 SAVINGS: VERY LITTLE OR A LOT Table 4.2: UK Household Savings Profile (%), 2001/2002, 2004/2005 and 2007/2008 LOW PARTICIPATION IN FINANCIAL SERVICES Table 4.3: UK Household Participation in Financial Services by Type of Product by Total Weekly Household Income (%), 2004/2005 KEY POINTS 5. Basic Banking BASIC ACCOUNTS — STILL NOT FOR ALL PAY BEFORE YOU BUY CHEQUE CASHING ALTERNATIVES TO BANK BRANCHES KEY POINTS 6. Supermarket Banking 2009: YEAR OF OPPORTUNITY SAINSBURY’S BANK TESCO PERSONAL FINANCE ASDA MARKS & SPENCER THE CO-OPERATIVE GROUP KEY POINTS 7. Savings SHORT-TERM SAVINGS Little Point in Saving Over £6,000 Minimal Interest Rates Static Demand Table 7.1: Average Weekly UK Household Expenditure on Selected Financial Products (£), 1997/1998, 2001/2002, 2004/2005 and 2007 National Savings & Investments Table 7.2: National Savings & Investments — Sample Interest Rates by Product (%), 1999-2009 LONG-TERM SAVINGS Short-Term Attitudes Killing Off Occupational Pensions Friendly Societies Paying for Care KEY POINTS 8. Loans WEIGHTY DEBTS Table 8.1: Indebtedness to Individuals and Housing Associations in the UK (£m and index 30th June 2001=100), 30th June 2001-2009 EQUITY RELEASE — A LOAN FROM ONESELF Table 8.2: Main Media Advertising Expenditure on Equity Release by Brand (£000), Year Ending 31st March 2009 SHORT-TERM CREDIT HOME CREDIT CATALOGUE FINANCE AND STORE CREDIT CREDIT UNIONS MICROFINANCE DEBT COLLECTORS KEY POINTS 9. Advertising and Promotion RISE OF COMPARISON SITES SIMPLE PRODUCTS DOMINATE ADVERTISING Table 9.1: Main Media Advertising Expenditure on Financial Services by Sector (£000 and %), Year Ending 31st March 2009 CARS AND HOMES Table 9.2: Main Media Advertising Expenditure on Car Insurance by Brand (£000 and %), Year Ending 31st March 2009 Table 9.3: Main Media Advertising Expenditure on Home Insurance by Brand (£000 and %), Year Ending 31st March 2009 LIGHT ON LIFE MONEY HANDLING EMERGENCIES AND SAVINGS Table 9.4: Main Media Advertising Expenditure on Accountants, Solicitors and Injury Claims by Brand (£000 and %), Year Ending 31st March 2009 TIGHT TARGETING ACORN CAMEO Mosaic KEY POINTS 10. An International Perspective UNDEVELOPED MARKETS OFFER LITTLE COMMERCIAL ATTRACTION THE US — SELF-HELP AND CHURCHES OPPORTUNITIES IN HOME CREDIT MICROFINANCE KEY POINTS 11. PEST Analysis POLITICAL FACTORS Proposed Banking Act Consumer Credit Act Reducing Financial Exclusion The Minimum Wage ECONOMIC FACTORS Losing Jobs Table 11.1: Number of Male Workforce Jobs in the UK by Industry (000), March 2008 and 2009 Figure 11.1: Number of Male Workforce Jobs in the UK by Industry (000), March 2008 and 2009 Table 11.2: Number of Female Workforce Jobs in the UK by Industry (000), March 2008 and 2009 Figure 11.2: Number of Female Workforce Jobs in the UK by Industry (000), March 2008 and 2009 Young Households Hard-Pressed Financially Table 11.3: Average Gross Weekly Household Income and Household Expenditure in the UK by Age of Household Reference Person (£), 2007 SOCIAL FACTORS TECHNOLOGICAL FACTORS KEY POINTS 12. Consumer Dynamics INTRODUCTION D AND E GRADES LAG IN SAVING Table 12.1: My Savings Have Increased Over the Past Year (% of respondents), 2009 DEFLATING THE CASH SAFETY CUSHION Table 12.2: My Savings Have Decreased Over the Past Year (% of respondents), 2009 NEARLY A QUARTER OF THE D GRADE HAVE NO SAVINGS Table 12.3: I Have No Savings (% of respondents), 2009 TRYING TO LIMIT NEW DEBT Table 12.4: My Debts Have Increased Over the Past Year (% of respondents), 2009 EMPHASIS ON REPAYING EXISTING DEBT Table 12.5: My Debts Have Decreased Over the Past Year (% of respondents), 2009 THREE IN TEN ARE WITHOUT DEBTS Table 12.6: I Have No Debts, Not Even a Mortgage (% of respondents), 2009 RETIREMENT-INCOME FEARS Table 12.7: Proportions of Ds and Es with Falling Savings, No Savings and Rising Debts (%), 2009 Table 12.8: I Worry That My Retirement Income is, or Will Be, Insufficient to Live on Comfortably (% of respondents), 2009 PROPERTY RETAINS ALLURE Table 12.9: Property is the Best Investment for a Pension (% of respondents), 2009 ADVISER CONSULTATIONS PEAK PRE-RETIREMENT Table 12.10: I Have Consulted an Independent Financial Adviser Within the Past Year (% of respondents), 2009 FEWER WORRIES ABOUT ADVICE COSTS Table 12.11: Independent Financial Advice is Too Expensive for Me to Afford (% of respondents), 2009 INTERNET IS MAIN SOURCE OF FINANCIAL ADVICE — BUT NOT FOR THE D OR E GRADES Table 12.12: I Rely Principally on the Internet for Financial Information (% of respondents), 2009 ELDERLY RATE NEWSPAPERS HIGHLY Table 12.13: I Rely Principally on Newspapers for Financial Information (% of respondents), 2009 LOWER INCOME GROUPS LOOK TO TELEVISION Table 12.14: I Rely Principally on Television for Financial Information (% of respondents), 2009 RADIO MOST POPULAR IN THE A AND D GRADES Table 12.15: I Rely Principally on the Radio for Financial Information (% of respondents), 2009 POOR AND ELDERLY LAG IN ACCESS TO FINANCIAL INFORMATION Table 12.16: I Do Not Rely Principally on Any of These Sources for Financial Information (% of respondents), 2009 OLDER AND POORER PEOPLE LAG IN ONLINE BANKING Table 12.17: I Bank Online (% of respondents), 2009 ONLINE CONFIDENCE ISSUES Table 12.18: I Have Full Confidence in Online Banking (% of respondents), 2009 KEY POINTS 13. Company Profiles INTRODUCTION HIGH-STREET BANKS: INDEPENDENTS Barclays Table 13.1: Barclays PLC — Financial Performance (£000, number, £ and %), Years Ending 31st December 2006-2008 HSBC Table 13.2: HSBC Holdings PLC — Financial Performance ($000, number, $ and %), Years Ending 31st December 2006-2008 Lloyds Banking Group Table 13.3: Lloyds Banking Group PLC — Financial Performance (£000, number, £ and %), Years Ending 31st December 2006-2008 Grupo Santander (Spain) HIGH-STREET BANKS: STATE CONTROLLED Northern Rock Table 13.4: Northern Rock PLC — Financial Performance (£000, number, £ and %), Years Ending 31st December 2006-2008 The Royal Bank of Scotland Table 13.5: The Royal Bank of Scotland Group PLC — Financial Performance (£000, number, £ and %), Years Ending 31st December 2006-2008 INSURANCE COMPANIES Aviva (Norwich Union) Table 13.6: Aviva PLC — Financial Performance (£000, number, £ and %), Years Ending 31st December 2006-2008 Legal & General Table 13.7: Legal & General Group PLC — Financial Performance (£000, number, £ and %), Years Ending 31st December 2006-2008 Prudential Table 13.8: Prudential PLC — Financial Performance (£000, number, £ and %), Years Ending 31st December 2006-2008 RSA Table 13.9: RSA Insurance Group PLC — Financial Performance (£000, number, £ and %), Years Ending 31st December 2006-2008 NATIONAL SAVINGS AND THE POST OFFICE National Savings & Investments The Post Office Table 13.10: Post Office Ltd — Financial Performance (£000, number, £ and %), Year Ending 26th March 2007, 53 Weeks Ending 30th March 2008, and Year Ending 29th March 2009 NICHE ORGANISATIONS FOR THE LESS AFFLUENT Cash Generator Table 13.11: Cash Generator Ltd — Financial Performance (£000, number, £ and %), Years Ending 31st January 2006-2008 Cattles Table 13.12: Cattles PLC — Financial Performance (£000, number, £ and %), Years Ending 31st December 2005-2007 Kensington Group The Money Shop Table 13.13: Instant Cash Loans Ltd — Financial Performance (£000, number, £ and %), Years Ending 30th June 2006-2008 Park Group PayPoint Table 13.14: PayPoint PLC — Financial Performance (£000, number, £ and %), 51 Weeks Ending 25th March 2007, 53 Weeks Ending 30th March 2008 and Year Ending 29th March 2009 Provident Financial Table 13.15: Provident Financial PLC — Financial Performance (£000, number, £ and %), Years Ending 31st December 2006-2008 KEY POINTS 14. The Future NO COMMISSION, NO ADVICE? LOW-COST LOANS: ARE THEY FEASIBLE? SAVING WHEN INTEREST RATES ARE LOW PENSIONS GAP PROPERTY DOMINANT MEANS TESTING IS THE ELEPHANT IN THE ROOM BRANDS FOR TOMORROW’S LESS AFFLUENT THE NEXT 5 YEARS KEY POINTS 15. Glossary 16. Further Sources Associations General Sources Government Sources Other Sources Key Note Sources

Companies Mentioned

- Barclays - HSBC - Lloyds Banking Group - Grupo Santander (Spain) - Northern Rock - The Royal Bank of Scotland - Aviva (Norwich Union) - Legal & General - Prudential - RSA - Cash Generator - Cattles - Kensington Group - The Money Shop - Park Group - PayPoint - Provident Financial