The FCA survey (which was carried out between February and June) found that 7.8m people currently find domestic bills and credit commitments a heavy burden. This reflects a 5% increase since 2020.
Those missing domestic bills and credit commitments in three or more of the last six months has also increased from 3.8m in 2020 to 4.2m this year. The FCA believes this figure will rise again since “many adults are already heavily burdened by their debts.”
The survey also found that people living in the most deprived areas of the UK are nearly seven times as likely to be in financial difficulty compared to those living in the least deprived areas.
12% of people in the North East and 10% in the North West are in financial difficulty, while only 6% of people in the South East and South West are in a similar position.
In line with its three-year strategy to prevent serious harm and set higher standards the FCA has reacted quickly, reminding thousands of lenders how it expects them to support customers in financial difficulty.
The FCA has asked firms to help those in financial difficulty by reassessing customers’ insurance needs and providing clear information about the additional cost of premium finance. Other measures include waiving fees associated with adjusting a customer’s policy in line with the reassessments, and considering whether cancellation fees should be removed for customers in financial difficulty.
This initiative will help protect customers from unnecessary products or add-ons and unfair penalties. The regulator has already taken action against thirty firms to make sure customers get the help they need.
As well as this recent guidance, the FCA has engaged with buy now pay later providers to improve customers’ terms and conditions since it doesn’t yet regulate these products.
Commenting on this research, Sheldon Mills, executive director, consumer and competition, has 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.”
Financial Lives is the largest financial survey in the UK, with more than 19,000 people interviewed between February and June 2022. The full findings will be published in early 2023.