Around 7.8 million people are finding it a heavy burden to keep up with their bills – an increase of around 2.5 million people since 2020 – a survey by the Financial Conduct Authority (FCA) has found.
The FCA’s Financial Lives survey, which was carried out between February and June, found that one in four UK adults are in financial difficulty or are vulnerable to financial difficulty if they suffer a financial shock. The FCA also found that 4.2 million people have missed bills or loan payments in at least three of the six months before the survey took place.
“Our research shows that people up and down the country are struggling to keep up with their bills,” said Sheldon Mills, FCA’s executive director, consumer and competition. “If you are facing financial difficulty, you don’t need to struggle alone. There is free debt advice available, and we have told firms that they must work with their customers to solve any problems with payment.”
In response to the cost-of-living pressures, the FCA said it reminded thousands of lenders how it expects them to support customers in financial difficulty and took action with more than 30 firms to make sure customers get the help they need.
While the FCA does not regulate “buy now, pay later” products, the regulator said it has engaged with providers to improve customers’ terms and conditions. The watchdog also recently warned insurers to protect their customers from unnecessary add-ons and unfair penalties, and its upcoming Consumer Duty will set a higher level of consumer protection and require firms to put their customers’ needs first.
The Chartered Insurance Institute (CII) responded to the survey’s findings and issued a challenge to the government and its various agencies to work more closely with the insurance industry to find solutions to the problem.
“We acknowledge the findings of the FCA’s Financial Lives survey,” said Matthew Connell, CII policy and public affairs director. “We believe that to help households on low earnings, we need to build on what works. That includes insurers and brokers working in partnership with landlords to give those in social housing highly affordable and relevant home insurance, pricing products in a way that covers the landlords’ expenses fairly and avoiding underinsurance.”
Connell said this approach will address the key issues raised by the FCA’s open letter addressed to the CEOs of financial firms. The letter urges financial firms to help consumers in vulnerable circumstances, ensure fair value, tackle underinsurance and handle claims promptly and fairly.
“We challenge regulators, MPs, government departments and local councils to make greater take-up of social housing insurance a priority, to ensure consumer outcomes are improved by some of those affected most by the cost-of-living crisis,” Connell said. “We also challenge them to work with insurers, brokers, their trade associations and the CII to establish similar routes to market for tenants of private landlords.”