Staff at voluntary organisations, such as those dealing with ex-offenders, could assist but are put off from getting involved, a report found, for fear of falling foul of FCA rules on financial advice.

The new report from cross-party think tank Demos stated that a lack of “coordination between sectors involved in financial services provision and advice is stymying attempts to address the problem of financial exclusion”.

Encouraging charities to help is among the recommendations to Government.

Another is to urge companies to make employee contributions to the new Lifetime ISA through payroll.

The plans stated: “Demos’ report identifies local charities, in particular, as a key resource for targeting those most at risk. Local organisations that work with homeless people, food bank visitors, housing association tenants or ex-offenders have the potential to advise financially excluded people who would otherwise be hard to reach.

“But charity staff that Demos spoke to were reluctant to give basic financial guidance due to many believing the FCA regulations on organisations giving financial advice are more restrictive than they actually are.”

It said: “The Government should allow Lifetime ISA customers to borrow without incurring a charge if the borrowed funds are fully repaid, and encourage employers to offer to provide employee contributions to the Lifetime ISA through payroll.

“In the long-term, the Government should introduce an auto-enrolment requirement on employers for savings.”

The study also showed that 1.5 million British adults lack a bank account and thousands more are building up “problematic debt and falling prey to pay day loans each year”.

Authors of the report stated that many ordinary Britons also “simply lack the financial and digital know-how to manage their money effectively”.

The report said: “Financial exclusion can be a vicious cycle, as the under-banked miss out on deals that are only available online or through direct debit payments (such as energy bills, mobile phone contracts and internet plans), and often struggle to access the credit needed to make investments, such as buying property, or the financial products to help them plan and save for the future.”