New data released by the Financial Conduct Authority (FCA) has revealed the number of people struggling to meet bills and credit repayments has risen by 3.1m since May 2022 to 10.9 million compared with 7.8 million in May 2022.
The number of adults who missed bills or loan payments in at least three of the last six months has also gone up by 1.4 million, from 4.2 million to 5.6 million over the same period.
What’s more, Bernie Hickman, CEO, Legal & General Retail, commented that Legal & General’s latest Deadline to Breadline report that found UK households’ financial resilience has shrunk by 21% since 2020 (from 24 days to 19 days) – with the average working household working only 19 days from the breadline in the event it lost its income.
“This should come as no surprise as increases in interest rates have pushed mortgage bills and the costs of other forms of debt much higher than people have been used to,” said Karen Noye, mortgage expert at Quilter:
“While the pandemic no doubt caused many financial shocks, particularly for the self-employed, the cost of living crisis arguably has played a much greater role in damaging people’s financial wellbeing. The convergence of higher living costs and higher interest rates has pushed people’s finances right to the edge and sometimes over.”
The FCA has claimed that “help is available for those who need it” having repeatedly reminded firms of the importance of supporting their customers and working with them to solve problems with payments.
In enforcing this, the FCA has sent 3,500 letters reminding lenders of how they should be supporting borrowers in financial difficulty and told 32 lenders to make changes to the way they treat customers. This work has led to £29 million in compensation being secured for over 80,000 customers.
Indeed, recent FCA research found that the cost of living is having an impact on people’s mental wellbeing with around half of UK adults in January 2023 reporting feeling more anxious or stressed due to the rising cost of living than six months earlier.
The FCA said it is working to address this through continuing to work with other regulators and debt organisations to drive better coordination and help make sure customers are treated fairly and supported if they get into financial difficulty.
The FCA will also be introducing the Consumer Duty in the summer. The Duty aims to be the “driving force” behind the FCA’s consumer protection work, as it will require firms to act to deliver good outcomes for consumers and make sure that they are properly supported while using a financial product or service.
