September 24, 2023

According to the city regulator, as of the beginning of this year, one in five adults was finding bills and credit commitments a burden.

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The Financial Conduct Authority (FCA) said the number of adults struggling this way is expected to increase by 3.1 million by May 2022, up from around 7.8 million (15%) in May last year to 10.9 million (15%) in January. 21%). 2023.

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The number of UK adults who have missed a bill or loan payment in at least three of the previous six months is also forecast by the regulator to increase by 1.4 million, rising from 4.2 million (8%) in May 2022 to 5.6 million (11%) ) Has occurred. ) in January 2023.

The latest figures were released after the regulator collected more than 5,000 responses as part of its UK-wide survey of people aged 18 and over.

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Free expert advice is available if you find yourself in debt or want to know more about how to manage your finances

The researchers also found that 29% of adults with mortgages and 34% of renters experienced an increase in payments in the six months from January this year.

There were also signs of some people reducing their insurance cover as a way of easing the pressure of general living costs – which could leave them in even greater trouble if something goes wrong.

Of those who had insurance and protection policies last spring, 8% had canceled one or more policies and 7% had reduced their level of cover, particularly to save money because of rising costs. For, in the six months from January this year.

Some did both – meaning around 6.2 million adults (13%) who had a policy in May 2022 canceled or reduced their cover by January 2023.

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The FCA is reminding borrowers that they can get help from their lenders if they are struggling to make payments.

The regulator said it has repeatedly reminded firms of the importance of supporting their customers and working with them to resolve issues with payments, writing to industry owners to ensure that they Aware of regulatory requirements.

Where firms have not supported their customers properly, the FCA has asked them to make changes.

It has reminded 3,500 lenders on how they should support borrowers in financial difficulty and asked 32 lenders to make changes to the way they treat customers.

As part of its Financial Life Survey, the FCA also found that the cost of living is having an impact on people’s mental health.

The regulator said that about 28.4 million people felt more anxious or stressed due to the rising cost of living in January 2023 than six months earlier.

About 28 per cent had lost sleep due to money worries.

One woman reported in the survey that she used the credit to pay for car repairs, home insurance and food purchases.

Another said she had used all her savings to fill the oil tank and was dependent on oil to heat her home.

Another woman said she had taken out her son’s motor insurance.

One man told the survey that he had canceled his insurance and social visits and was also eating less.

And one woman said she was seeing her family less because of the cost of traveling long distances to see them. He had also stopped playing sports and participating in clubs.

Only one in 10 (11%) adults surveyed said they put off dealing with financial matters, such as by closing correspondence or ignoring warning letters.

Sheldon Mills, executive director of consumers and competition at the FCA, said: “Our research highlights the real impact that the rising cost of living is having on people’s ability to keep up with bills, although we are pleased to see that people are reaching There is help and advice.

“If you are concerned about your finances, you need not worry alone. We have told lenders that they should provide support tailored to your needs.

“And, if you find yourself in debt or want to know more about how to manage your finances, free expert advice is available.

“We will continue to act swiftly to ensure that financial firms help their customers who are experiencing financial difficulty or are concerned that they may soon be.”

The FCA will introduce a new consumer charge in the summer. The duty will require firms to act to deliver good outcomes for consumers and ensure they are properly supported when using a financial product or service.

The full Financial Life 2022 survey will be published later in 2023.

People can visit the government-backed MoneyHelper service for money tips.

It is important that customers understand that they can talk to us about their money concerns without being judged and thereby affecting their credit rating

A UK finance spokesperson said: “The banking and finance industry is fully committed to supporting customers who are struggling with repayments and today’s report from the FCA highlights that a number of tailored supports are available.

“The lender is actively engaging with customers and will always work with them to find the right solution for their particular needs and circumstances.

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“Anyone who is concerned about their financial situation should contact their lender as soon as possible to discuss the options available. Discussing your options with your lender will not affect your credit rating.”

The findings were released as a separate YouGov survey, commissioned by HSBC UK, found that almost eight in 10 (78%) people are actively looking for ways to reduce their spending. Are.

Only 3% of people in that survey knew that they could approach their bank or building society to discuss their financial concerns without it affecting their credit score.

Almost half (49%) of those surveyed for HSBC UK had cut non-essential spending and almost two-fifths (38%) are sticking to a more stringent budget.

Some 45% said they wanted to reduce their grocery bills by shopping at cheaper supermarkets, an April survey of more than 2,100 people found.

HSBC UK said, according to its own data, customers are typically canceling more than 200,000 subscriptions per month on its mobile banking app.

José Carvalho, Head of Wealth and Personal Banking, HSBC UK, said: “The increased cost of living is taking its toll on many people, but our research shows that people are right by taking action to catch up on some of their discretionary spending. are working.

“We are here to help. It is important that customers understand that they can speak to us about their money concerns without being judged and without it affecting their credit rating.

“We are offering free financial health checks and webinars to provide personalized guidance to customers and non-customers alike, including the opportunity to book a call with a financial wellness advisor for additional one-to-one support Is.”