The number of UK consumers who are struggling to meet bills and credit repayments has jumped 40%, or 3.1 million, to 10.9 million from a year ago, says the Financial Conduct Authority.
The watchdog adds the number of adults who missed bills or loan payments in at least three of the last six months has lifted by 33%, or 1.4 million, to 5.6 million over the same period.
The FCA says it has “repeatedly reminded firms” of the importance of supporting their customers and working with them to solve payment problems.
The impact of the cost of living has led to around half of UK adults, or 28.4 million people, saying they feel “more anxious or stressed” about paying bills than six months ago, the FCA’s Financial Lives survey found in January.
Last July, the regulator wrote to 3,500 lenders to remind them how they should support borrowers in financial difficulty, while instructing 32 lenders to make changes to the way they treat customers.
It says this work has led to £29m in compensation being secured for over 80,000 customers.
FCA executive director of consumers and competition Sheldon Mills says: “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.”
Key chief executive Will Hale adds: “These are extremely worrying figures [from the FCA] — especially as they don’t include those who are only one big bill or missing pay cheque away from having to make hard choices around what spending is essential and what can wait.
“While some mortgage borrowers have been protected from the recent rate rises due to fixed rate deals, when these fixed rates expire many customers will see monthly payments rise which will put further pressure on their finances.
“While the fact that the FCA recognises these challenges and is calling for lenders to work with borrowers to find the best solution is good news, there is more that needs to be done.
“Whether it is helping people to return to making regular repayments, encouraging them to speak to debt management firms or for older customers considering whether an alternative later life lending product may help, there are options out there.
Legal & General Retail chief executive Bernie Hickman points out: “Legal & General’s latest Deadline to Breadline report that found UK households’ financial resilience has shrunk by 21% since 2020 [from 24 days to 19 days] – with the average working household working only 19 days from the breadline in the event it lost its income.
“As a lender, we encourage customers who might be struggling to contact us as soon as possible and we can work with them to assess if there are solutions to help ease the burden on their families including alternative payment arrangements or payment holidays.”
