7.4 Million UK Consumers Struggle to Pay Bills, Financial Regulator Finds

7.4 Million UK Consumers Struggle to Pay Bills, Financial Regulator Finds

10 Apr    Finance News, In Business

According to recent findings from the Financial Conduct Authority (FCA), more than 7.4 million individuals across the UK encountered challenges in meeting bill payments or credit repayments in January, underscoring ongoing financial strain among a significant portion of the population.

Although this figure represents a decrease from previous years, it remains substantially higher than pre-crisis levels, indicating persistent financial difficulties exacerbated by the cost of living crisis.

The FCA’s data, which tracks household financial distress, reveals a concerning trend of escalating financial challenges over recent years. In February 2020, prior to the onset of the cost of living crisis, 5.8 million individuals reported struggling to pay significant bills. By January 2023, following the impact of events such as the Russian invasion of Ukraine, this number nearly doubled to 10.9 million.

In response to these findings, the FCA emphasizes the importance of proactive engagement with lenders for individuals facing financial hardship. It reassures consumers that discussing financial concerns with lenders will not adversely affect their credit scores, underscoring the obligation of financial firms to listen to customer concerns and provide appropriate support.

Over the past year, 2.7 million individuals sought assistance from lenders, debt advisers, or financial support charities. Encouragingly, nearly half of those who sought help reported experiencing improved financial circumstances as a result. However, the FCA expresses concern over the reluctance of some individuals to engage with lenders about their financial challenges, with two in five individuals who fell behind on payments avoiding such discussions.

Laura Suter, director of personal finance at AJ Bell, acknowledges the mixed financial landscape reflected in the data, noting significant disparities in household financial resilience. While a substantial portion of the population faces financial precarity, a majority still maintain disposable income, highlighting the divided nature of the economic recovery.

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In response to these findings, the FCA reiterates the obligation of financial firms to support customers and collaborate with them to address payment difficulties. Sheldon Mills, executive director of Consumers and Competition at the FCA, urges individuals struggling with payments to reach out to their lenders promptly, emphasizing the availability of support options and free debt advice through resources like MoneyHelper.

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