New research from the Financial Conduct Authority (FCA) suggests that around one in five adults were finding bills and credit commitments a heavy burden by the start of this year. The City regulator found that the number of adults struggling this way is estimated to have increased by 3.1 million since May 2022, rising from around 7.8 million (15%) in May last year to 10.9 million (21%) in January 2023.
The number of UK adults who had missed bills or loan payments in at least three of the previous six months is also estimated by the FCA to have increased by 1.4 million, from 4.2 million (8%) in May 2022 to 5.6 million (11%) in January 2023. The regulator released the latest figures after gathering more than 5,000 responses as part of its UK-wide survey of people aged 18 and over.
Researchers also found that 29 per cent of adults with a mortgage and 34 per cent of renters had experienced payment increases in the six months to January this year.
There were also signs of some people reducing their insurance cover as a way to ease general living costs pressures - which could leave them worse off or in difficulty if something goes wrong.
Among people who had insurance and protection policies last spring, eight per cent had cancelled one or more policies and seven per cent had reduced their level of cover, specifically to save money due to rising living costs, in the six months to January this year.
Some did both - meaning that around 6.2 million adults (13%) who had policies in May 2022 had cancelled or reduced their cover by January 2023.
Debt help
The FCA is reminding borrowers that they can get help from their lenders if they are struggling to keep up with payments.
It also said it 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 have not supported their customers properly, the FCA has told them to make changes.
It has 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.
As part of its Financial Lives survey, the FCA also found that the cost of living is having an impact on people's mental wellbeing.
Around 28.4 million people in January 2023 felt more anxious or stressed due to the rising cost of living than six months earlier, the regulator said. Some 28 per cent had lost sleep due to money worries.
Just over one in 10 (11%) adults surveyed said they had put off dealing with financial matters, such as leaving correspondence unopened or ignoring warning letters.
Commenting on the findings, Sheldon Mills, executive director of consumers and competition at the FCA, 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 full Financial Lives 2022 survey will be published later in 2023.
The study follows polling by Advice Direct Scotland which found that six-in-10 Scots are worried about affording their bills this year amid the cost of living crisis.
The charity offers a range of advice and support through its free independent debt advice service which is authorised and regulated by the FCA and is supported by the Scottish Government. Specialist debt and money advisers can work with people to assess their current situation, look at their income and outgoings, and consider what to do next.
This includes assessing that people are receiving all the benefits they are entitled to.
John Baird, head of debt services with Advice Direct Scotland, said: “The latest surge in the number of people struggling to pay their bills and debts serves as a stark reminder of the devastating impact of the cost-of-living crisis on many families. We know that energy bills, Council Tax, and credit cards are the most common forms of debt, with some people finding themselves owing thousands of pounds.
“A significant proportion of Scots are relying on their credit cards for day-to-day expenses and are also grappling with the challenge of paying off the minimum balance.
“With fixed-rate mortgage deals coming to an end, there is further concern that more people will struggle with repayments in the months ahead.”
He added: “We urge people in Scotland not to struggle alone with their debt - our specialist expert advisers at moneyadvice.scot are ready to help those with personal finance worries who need a way of getting back on track.
“Approximately half a million people across Scotland are not claiming the financial support they are entitled to - you don’t have to be one of them.”
The free service can be contacted via the website www.moneyadvice.scot or on 0808 196 2316.
To keep up to date with the latest cost of living news, join our Money Saving Scotland Facebook page here, follow us on Twitter @Record_Money, or subscribe to our newsletter which goes out Monday to Friday - sign up here.
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