The impact of the cost-of-living crisis has meant the number of adults who have missed a bill or loan payment in at least three of the last six months has soared by 1.4 million.
It means there are now 5.6 million people in this situation, according to a survey by the Financial Conduct Authority (FCA).
The number of people who were struggling to pay bills and make repayments to credit cards had also risen since May 2022 by 3.1 million. This meant as many as 10.9 million people were facing difficulties.
But the message to anyone facing these challenges was that there was help available and it was important to reach out and access this support.
Sheldon Mills and executive director at the FCA, 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.
“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.”
Stress, anxiety and the cost-of-living crisis
The FCA found 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.
It said it had 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.
In the summer the FCA is due to introduce ‘the Consumer Duty’ to provide further protection for customers. It will mean firms must act to deliver good outcomes for consumers and make sure that they are properly supported while using a financial product or service.
Laura Suter, head of personal finance at AJ Bell, said: “It’s no great leap to hear that half of UK adults are increasingly stressed about the cost of living, with price rises causing people anxiety about how they will pay their bills.
“And it’s not just a case of missing the odd phone bill or subscription service, for many people this will be missing payments on their mortgage or not meeting a credit card payment, that could drag them further into debt.
“When we consider that the FCA has already forecast that 356,000 people will have missed a mortgage payment by the end of June 2024, we can see the real impact that these squeezed budgets and missed bills will have.
“While lenders are being urged to be supportive and lenient with customers, the nation faces a ticking time bomb of defaults, whether that’s on mortgages, debt or council tax. With prices rising and wages failing to keep up, it’s inevitable that many households can’t make ends meet.
She added: “Anyone struggling with repayments needs to face the issue head on: they should approach their lender to at least find out their options and weigh up which might work best for them.
“If they want an independent opinion they could speak to a charity like Citizens Advice to get more advice.”
You can find out more information about what to do if you are struggling to pay your mortgage here.
Our sister website, The Money Pages, has also published a detailed article about how to deal with money difficulties and anxiety surrounding this here.
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