Hundreds of thousands of people in Wales are struggling to pay their bills as the cost of living crisis continues to bite, shows new research from the Financial Conduct Authority (FCA).
The regulator for the UK’s financial services sector said that in January around 300,000 people in Wales had missed bills or loan payments in at least three of the previous six months. This was an increase on the previous survey in May last year when it as 200,000. The latest figure equates to 14% of people in Wales compared to 11% in the UK as a whole.
For the UK as a whole it rose to 5.6 million. The number of people who felt that making these kinds of payments was a heavy burden jumped from 7.8 million (15%) to 10.9 million (21%).
It also found that around 55% of people felt more anxious or stressed due to the rising cost of living, and around 500,000 people were struggling to pay their bills or meet credit repayments.
The FCA has reminded borrowers that they can get help from their lenders if they are struggling to keep up with payments.
Cardiff-born executive director, consumers and competition at the FCA, Sheldon Mills said: “We know that cost of living pressures are affecting people in Wales. But you don’t need to struggle alone. We’re ensuring lenders provide support if you need it, and there is free debt advice available for those in difficulty.”
Last year the FCA wrote to more than 3,500 lenders to remind them of the standards they should meet as consumers across the UK struggle with the impact of high inflation. It has also told old 32 lenders to make changes to the way they treat customers. This work has led to up to £47m in compensation being secured for over 195,000 customers.
The FCA is also banning certain providers of debt advice from receiving referral fees from debt solution providers.
The ban should save consumers struggling with debt thousands of pounds in unnecessary fees and make sure they receive better quality advice.
The regulator said it will put a stop to the business model which incentivises debt packagers to recommend certain options that make them more money, rather than what is in the customer’s best interest.
The debt packager firms earn money from fees paid when consumers are referred to solution providers such as an insolvency practitioner for an Individual Voluntary Arrangement (IVA) in England, Wales and Northern Ireland or, in Scotland, a Protected Trust Deed (PTD).
By contrast, some other solutions may be more suitable for some consumers such as debt relief orders (DRO) in England, Wales and Northern Ireland, or Minimal Asset Process (MAP) in Scotland which do not earn debt packagers any fees.
Fees for IVAs or PTDs can cost consumers £3,650 or more over their lifetime compared to less than £100 for options such as DROs and MAPs, if eligible.
Mr Mills said: “Good quality debt advice is vital in helping people out of financial difficulty and poor advice can have a devastating impact on those who are already struggling.
“This ban will put a stop to the business model that incentivises bad advice and reduce harm for consumers.
“We are giving existing firms four months to help them adapt. Anyone struggling with debt can get free and impartial advice from MoneyHelper or other services.”
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