Almost two million disabled people across the UK have contacted debt advice charities for support over the last 12 months*as they continue to suffer disproportionately from the cost of living crisis, according to research from responsible lender, Creditspring.
The research found that one in eight (12%) disabled people contacted debt advice charities over money worries – however, this figure jumped sharply to almost one in three (29%) of those aged 18-24 compared to a UK average of 16% for this age group.
The research suggests that disabled people are more likely to be forced to turn to debt advice charities than non-disabled people, as they are hit hardest by the cost-of-living crisis and a severe lack of support. One in three (29%) disabled people think their bank could do more to support them to make better financial decisions. Younger people, in particular, are vocal about the need for additional support, with seven in ten (69%) 18-24 year olds calling for more support from banks for disabled customers.
The research suggests that many disabled people expect their financial situation to worsen – almost four in ten (38%) admit they are terrified for their financial future – much higher than the UK average of 30%. And again, it is younger people that are being hit the hardest, with almost two thirds (63%) of young disabled people admitting they are terrified about their financial future, while 59% say they feel ‘stuck’ with no way out.
Despite energy regulator Ofgem recently announcing a reduction in the energy price cap for Q4 2023, nearly two in five (17%) disabled people say they are reliant on their savings to pay bills, rising to 40% of those aged 18-24.
Despite inflation dipping in recent months, six in ten (59%) disabled people say the cost of living is making them feel financially unstable, compared to the 50% UK average. And women are feeling the brunt of this much more with two thirds (67%) declaring their finances unstable.
Credit will be a lifeline for disabled people to help manage their finances – almost two in five (17%) disabled people say they will be reliant on credit to get by over the next six months – so responsible lenders need to ensure that their disabled customers are fully supported and aren’t forced to turn to high-cost or illegal lenders. Around one in five (21%) disabled people who borrowed from a high-cost lender struggled to repay the money, and a similar number (20%) missed a repayment, which can lead to a debt spiral.
The research reveals that 15% of disabled people turned to high-cost loans as they were rejected from mainstream lenders with one in five (18%) admitting the fees were higher than expected, a similar number (20%) missing a repayment and 15% ending up in a debt spiral.
In addition to the need for increased support from financial providers, over two thirds (35%) of disabled people saythere’s not been enough government support and have had to turn elsewhere.
Neil Kadagathur, Co-Founder and CEO of Creditspring said “The cost of living continues to disproportionately impact the most vulnerable members of our society – these stark figures demonstrate not only how disabled people, especially younger people, are struggling to stay financially afloat. As we approach another winter of high energy costs, many disabled people are hugely concerned about how they will juggle their finances, and the worry is that they’ll be forced to turn to high-cost or illegal lenders to make ends meet but end up piling up debt.”
“Debt advice charities play a vital role for those struggling with their finances, but they shouldn’t be left to support vulnerable people by themselves – banks and other financial providers have a unique opportunity to provide support to customers.”
“Our research highlights a clear need for change in the lending industry. New regulated products that are more inclusive, and easier to understand and use will make a big impact on the lives of people from all backgrounds, enabling them to be more financially stable, retake control over their finances and ultimately their future.”
Richard Lane, Director of External Affairs at StepChange Debt Charity, said “At StepChange we consider all of our clients to be financially vulnerable, however, over half of our clients have at least one additional vulnerability, which can include physical health conditions, mental health conditions, learning disabilities, sight or hearing difficulties. Our data shows that at the point of seeking debt advice from StepChange, clients with additional vulnerabilities are often struggling to keep up with everyday essential spending and are more likely to have a negative budget, where monthly expenditure is greater than monthly income after proceeding through the charity’s debt and budgeting advice process.”
“The FCA has set out its expectations of firms in treating customers with additional vulnerabilities fairly, making sure they are proactively achieving good outcomes for customers and signposting to free debt advice and other sources of specialist support. With the cost of living crisis continuing to burden household finances, and the winter months just around the corner, it’s vital that firms are committed to treating vulnerable customers with empathy and acting with their best interests at heart.”
Personal finance and consumer rights expert, Martyn James, said “Creditspring’s Financial Stability Report is a sobering look at the very real impact of the cost-of-living crisis. Not only on our finances, but on our mental health too. Yet there is some optimism within the report. By listening to those impacted most by the current inflation maelstrom, and hearing their voices, there is an opportunity for lenders to change for the better.”