Millions struggling with bills regulator warns

The Financial Conduct Authority (FCA) has found 7.8 million people are finding it a heavy burden to keep up with their bills, an increase of around 2.5 million people since 2020. 

The FCA has published a snapshot of the latest edition of its landmark Financial Lives survey, which was carried out between February and June 2022.  

One in four UK adults are in financial difficulty or could quickly find themselves in difficulty if they suffered a financial shock, and 4.2 million people have missed bills or loan payments in at least three of the six months before the survey took place.  

The FCA has responded quickly to cost of living pressures, in line with its 3-year strategy to prevent serious harm and set higher standards. Earlier this year the watchdog reminded thousands of lenders how it expects them to support customers in financial difficulty and took action with more than 30 firms to make sure customers get the help they need.  

Although the FCA does not yet regulate buy now pay later products, the regulator successfully engaged with providers to improve customers’ terms and conditions. The FCA also recently warned insurers to protect their customers from unnecessary add-ons and unfair penalties, and its upcoming Consumer Duty will set a higher level of consumer protection and require firms to put their customers’ needs first. 

The report also found that 31.9 million people (60% of all UK adults) across the UK are finding it a heavy burden or somewhat of a burden to keep up with their bills, an increase of around 6 million people since 2020. There has been an increase in people in financial difficulty, with 4.2 million people missing domestic bills or credit repayments in 3 or more of the last 6 months, up from 3.8 million in 2020.  

12.9 million UK adults now have low financial resilience – 1 in 4 (24%) of all UK adults – and up more than 2 million on 2020 (10.7m). These are people who are in financial difficulty, or who could quickly find themselves in difficulty if they suffer a financial shock.  Adults living in the most deprived areas of the UK are nearly 7 times more likely to be in financial difficulty than those living in the least deprived areas; 27% of black people said they found it a heavy burden to keep up with bills, compared with 15% of all UK adults; 12% of people in the North East and 10% in the North West are in financial difficulty, compared with 6% in the South East and South West.  

Sheldon Mills, Executive Director, Consumer and Competition said “Our research shows that people up and down the country are struggling to keep up with their bills.”

“If you are facing financial difficulty, you don’t need to struggle alone. There is free debt advice available, and we have told firms that they must work with their customers to solve any problems with payment.”

The FCA continues to remind those in financial difficulty to contact their provider in the first instance to discuss their options, to shop around to find the best deal, and to use the MoneyHelper service for tips on living on a squeezed income and to find free, expert debt advice. 

Sarah Coles, Senior Personal Finance Analyst at Hargreaves Lansdown said “Millions of people have moved even closer to the cliff edge, as runaway bills and soaring prices stretch their household finances to breaking point. The fact that so many of the worst price rises are among life’s absolute essentials, which swallow such a large chunk of lower incomes, means the damage these price rises are doing is profound.”

“Right now, wages are rising at roughly half the pace of prices, and in the case of the public sector, around a fifth of the pace. For those who rely on benefits, these have risen at around a third of the rate of inflation – and aren’t going to go up again until April. It’s hardly surprising that so many people on lower incomes are hitting a brick wall financially.”

“But the impact is being felt right across the income spectrum. Average earners face the additional threats of much higher mortgage payments when they remortgage, and horrible energy bill hikes when the energy price guarantee comes to an end in April.”

“The HL Savings & Resilience Barometer looked at the proportion of people who would have enough cash left over to be resilient a year into the cost-of-living crisis. It found that among the bottom half of earners, fewer than 1 in 100 people in each income group had enough to be resilient, and only the top fifth of earners saw more than one in ten people fall into this bracket.”