The Financial Conduct Authority (FCA) has reminded borrowers they can get help from their lenders if they are struggling to keep up with payments, as it found the number of people struggling to meet bills and credit repayments has risen by 3.1m since May 2022 (10.9m, compared to 7.8m 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.
The FCA has repeatedly reminded firms of the importance of supporting their customers and working with them to solve problems with payment, including by writing to industry bosses to make sure they are aware of the regulator’s expectations.
Where firms haven't supported their customers properly, the FCA has told them to make changes. It reminded 3,500 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.
As part of its Financial Lives survey, the FCA found that the cost of living is having an impact on people’s mental wellbeing. Around half of UK adults, or 28.4 million people, in January 2023 felt more anxious or stressed due to the rising cost of living than six months earlier.
Sheldon Mills, Executive Director of Consumers and Competition said:
'Our research highlights the real impact the rising cost of living is having on people’s ability to keep up with their bills, although we are pleased to see that people have been accessing help and advice.
'If you’re concerned about your finances, you do not need to worry alone. We've 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 quickly to make sure financial firms help their customers who are facing financial difficulty or are worried they might be soon.'
The support needed to deal with the rising cost of living goes beyond what is provided by the financial services sector. As a result, the FCA continues 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 will be the driving force behind its 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.
Notes to editors
The FCA conducted follow-up interviews with thousands of respondents of its Financial Lives 2022 survey. The follow-up survey provides a look into the financial health of those surveyed eight to nine months on from the initial research.
The report contains detailed insights from people about the impact of the rising cost of living on their finances, including some positive stories about dealing with financial service providers. We have included these illustrative examples to encourage other consumers to seek support at an early stage and to demonstrate to firms the benefit of appropriate forbearance and proactive customer support.
The full Financial Lives 2022 survey will be published later in 2023.
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The FCA continues to respond to cost of living pressures in line with its strategy to prevent serious harm and has already:
- Reminded 3,500 lenders of how they should be supporting borrowers in financial difficulty.
- Told 32 lenders to make changes to improve the way they treat customers. So far, eight of these firms have voluntarily agreed to pay £29 million in compensation to over 80,000 customers.
- Made firms amend or remove 8,582 misleading promotions during 2022 - 14 times more than 2021
- Secured changes to the terms and conditions of buy now pay later products, ahead of any regulation of the sector.
- Warned banks to improve the way they treat small business owners when collecting and recovering debts.
- And set out what mortgage lenders can do to help customers worried about payments.