It reminds firms to support their customers during the cost-of-living crisis
The number of people struggling to meet bills and credit repayments has risen by 3.1 million over the past year, data released by the Financial Conduct Authority (FCA) has revealed.
The regulator said there was a total of 10.9 million people who missed their bills or loan payments, up from 7.8 million in May 2022. The number of adults who missed bills or loan payments in at least three of the last six months has also gone up by 1.4 million, from 4.2 million to 5.6 million over the same period.
The FCA 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 executives to make sure they are aware of the regulator’s expectations.
It also 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. This has led to £29 million in compensation being secured for over 80,000 customers.
Speak with your #lender if you’re finding it hard to keep up with payments.
— Financial Conduct Authority (@TheFCA) May 17, 2023
They should offer affordable options for you to pay back what you owe. #CostOfLiving #CoL https://t.co/VWxrWbrp10 pic.twitter.com/1QvlN4yWnc
As part of its Financial Lives survey, the FCA found that the cost-of-living crisis is having an impact on people’s mental wellbeing. Around half of UK adults, or 28.4 million people, in January 2023 felt more anxious or stressed due to the rising cost-of-living than six months earlier.
“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,” Sheldon Mills (pictured), executive director of consumers and competition at the Financial Conduct Authority, said.
“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.”
Mills added that the FCA would continue to act quickly to make sure financial firms help their customers who are facing financial difficulty or are worried they might be soon.
Ben Waugh, managing director at later life lender more2life, commented that older borrowers who may be on a fixed income or have borrowed to meet essential short-term needs are especially vulnerable due to the majority of their spending focusing on groceries, utilities and other costs which have risen particularly fast.
“It is vitally important that not only do lenders consider how best to support customers, but also decide when it is appropriate to refer them to other potential solutions,” Waugh pointed out. “Whether it is to a later life lending adviser, a debt management firm, or other specialist, there are options that can be considered.
“Providing them with the opportunity to discuss their situation with a third party can help them to make informed choices around their next steps.”
Bernie Hickman, chief executive at Legal & General Retail, said that as a lender, they encourage customers who might be struggling to contact them as soon as possible.
“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,” Hickman added. “We have also made available a range of free tools and resources on our financial safety net content hub to help people struggling to manage their outgoings.”
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