Over 3mn more people are struggling to keep up with bills and payments, according to official data that has shown the growing impact of the cost of living crisis on UK households.
The Financial Conduct Authority said on Tuesday that 10.9mn people reported struggling to meet bills and credit payments this month, up from 7.8mn in May 2022.
The figures have been published ahead of the FCA’s planned implementation of a new consumer duty at the end of July, aimed at strengthening consumer protection measures, including for loans.
The regulator is already warning that lenders need to do more to support borrowers. “Research highlights the real impact the rising cost of living is having on people’s ability to keep up with their bills,” said Sheldon Mills, FCA executive director of consumer and competition. He said the new consumer duty imposed on companies would ensure firms acted to deliver good outcomes for consumers.
The FCA’s findings have been drawn from its regular Financial Lives survey, which will be published in full later this year. The figures reflect a growing burden of debt in Britain, as more people fall into financial difficulty due to a challenging economic climate.
The Bank of England last week warned that inflation would remain above the UK government’s 2 per cent target until 2025, as central bankers raised interest rates to 4.5 per cent. This will exacerbate living costs as homeowners come up to renegotiate mortgage rates.
“For many people this will be missing payments on their mortgage or not meeting a credit card payment, that could drag them further into debt,” said Laura Suter, head of personal finance at platform AJ Bell. “More than a million people are due to remortgage on to higher rates before the end of the year, leaving many with a price shock they can’t afford.”
Forecasts published by the FCA in March predicted that 356,000 mortgage borrowers could face payment difficulties by June 2024. It said that young borrowers aged between 18 and 34 were more likely to be “financially stretched” than the rest of the working age population.
The FCA moved last week to warn firms it would take robust action where they failed to offer consumers “fair value”. It followed an assessment by the regulator that found many companies were still falling short on implementing the new consumer duty, which will bind groups to treat customers properly.
Regulators hope that measures will force firms to communicate more effectively with consumers, though industry figures have complained about the potential administrative burden on firms and the risk of a growing number of compensation claims.
UK Finance, the trade association for the banking and financial services sector, said: “Lenders are proactively contacting customers and will always work with them to find the right solution for their particular needs and circumstances.”