One in five Britons hold savings of £25,000 or more, and around one in 10 have savings exceeding £50,000, new data from the Financial Conduct Authority shows.

But the FCA found 61 per cent of people who have more than £10,000 in 'investible assets' held at least three-quarters of these assets in cash, rather than investments.

Investible assets include all money held in cash savings products, such as savings accounts and cash Isas as well as any savings held in current accounts. 

The FCA said it is aiming to see a higher proportion of those with £10,000 or more in investible assets to hold mainstream investments. A statement that comes at the same time that Rachel Reeves is considering slashing the cash Isa allowance.

But the watchdog's report raised questions over mixed messages, as it also flagged the large number of people with no cash savings at all. 

Meanwhile, typical financial advice is to hold at least three to six months post tax income in cash savings as an emergency fund, which for someone earning £40,000 is between £7,200 and £14,400. 

People holding on to more investible assets was partly driven by high interest rates on cash over the past few years, 'meaning many people will have turned to cash accounts over investments,' says Dan Coatsworth, investment analyst at AJ Bell.

It comes as Rachel Reeves is set to launch a review of Isas within weeks. 

One option being firmly considered is to reduce the cash Isa allowance from £20,000 to £4,000, to push more people to invest their tax-free pots.

How much do most people have saved? 

The FCA found one in ten people would not be able to cover an unexpected expense in an emergency.

A further one in five people have less than £1,000 in emergency savings to cover them.

It means many teeter on the brink of falling into debt if they were to be met with a shock bill.

The median amount people have in savings is between £5,000 and £6,000 - but this amount can 'be quickly eroded in a crisis' says Rachael Griffin, tax and financial planning expert at Quilter.

A This is Money poll recently revealed the huge savings gap amongst even our readers. Of the 7,984 who had voted at the time of writing, 12 per cent said they had less than £25,000 in savings and investments outside of their Isa while 18 per cent had more than £500,000. 

Is it wise to try to get those with £10,000 to invest? 

Financial experts say people should keep three to six months of essential spending in cash savings.

Sarah Coles, of Hargreaves Lansdown says: 'Everyone needs some cash for emergencies, and while we're working age, it should be enough to cover three to six months' worth of essential spending.'

Trying to push more of people's cash savings above £10,000 into investments, would threaten to dent the emergency pots of those earning more than the UK median wage of £37,480, for whom six months income is £13,500 

It comes as the Government is trying to encourage a shift towards investing rather than keeping savings in cash as a means to boost economic growth.

In the Spring Budget in March, the Government said it wanted to 'get the balance right between cash and equities to earn better returns for savers' and 'boost the culture of retail investment'.

Chancellor Rachel is expected to launch a review of the Isa market within weeks. 

The Treasury is preparing to begin a consultation to seek views from across the City of London on how the Isas could be reformed.

Investing is simply not viewed as a priority or as achievable to those who have low or no cash savings. 

Rachael Griffin adds: 'Given the stark figures released by the FCA it is clear that for a significant proportion of individuals building basic financial security is the priority not investment.

'However, the truth is there are lots of people that hold too much cash far above what is needed for their emergency buffer. 

'Policymakers must therefore avoid positioning saving and investing as mutually exclusive.'

One of the other main problems is a lack of understanding about investing. 

Chris Cummings, chief executive of the Investment Association, said: 'Many people in the UK may be taking one of the biggest financial risks of all: taking no risk.

'We must create a culture of inclusive investment that educates and encourages people across the country to make financial decisions that benefit them both now and for the long-term. 

'This includes looking at options for Isa reforms to better support long-term investment, improving access to financial advice and modernising the retail disclosure framework to shift the focus from warning to informing and empowering consumers.'

Sarah Pritchard, executive director of consumers and competition at the FCA, says: 'Our data shows that finances are stretched for many - with some unable to save for a rainy day. And we know that some do not have the confidence to invest.'