While many people across the country are still struggling to meet financial commitments, the picture has improved over the past year, research from the Financial Conduct Authority (FCA) has found.
The FCA found that 7.4 million people were struggling to pay bills and credit repayments in January 2024, down from 10.9 million in January 2023.
This was still higher than the 5.8 million recorded in February 2020, before the cost-of-living squeeze began.
As the FCA confirmed stronger protections for borrowers, the regulator reminded those in financial difficulty to contact their lender for support and visit MoneyHelper for tips on living on a squeezed income.
The report also found that more than five million people said they had fallen behind or missed paying one or more domestic bills or credit commitments in the previous six months from January 2024.
This was down from 6.6 million people a year earlier.
In the 12 months to January 2024, 2.7 million adults sought help from a lender, a debt adviser or other financial support charity because they found themselves in financial difficulty.
Nearly half (47%) of those that sought help said they were in a better position as a result.
However, two in five adults who had fallen behind on their bills said they had avoided talking to their lender about their finances.
Renters, single adults with children, adults from a minority ethnic background and people living in the North East of England were more likely to be in financial difficulty.
Sheldon Mills, executive director of consumers and competition at the FCA, said: “Our research shows many people are still struggling with their bills, though it is encouraging to see some benefitting from the help that’s available.
“If you’re worried about keeping up with payments, reach out to your lender straight away. They have a range of support options and will work with you to agree the best one for you. You can also find free debt advice through MoneyHelper.”
In light of these findings, Newspage asked a selection of financial services experts for their views, below.
Reaction:
Lewis Shaw, owner and mortgage expert at Shaw Financial Services:
“While the picture may be improving for personal finances, it’s still a painting by Hieronymus Bosch: deeply disturbing and worrying for many people.
“The reality is that people work forty-hour weeks just to survive.
“For most, the word thrive has been removed from their vocabulary entirely.
“Whilst it’s important people have the support they need if they get into difficulty, what’s really needed is a growing economy, higher wages and better job prospects.
“Anything else is fiddling while Rome burns.”
Daniel Wiltshire, actuary and IFA at Wiltshire Wealth:
“This report feels very optimistic. On the ground, many people I speak to are still struggling due to a combination of high mortgage rates, profiteering utility companies, skyrocketing rents and the highest tax burden since World War 2.
“It amounts to a complete failure of government policy over the past decade. The FCA are in denial.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“12 months ago was certainly rock bottom following months of fallout from the disastrous mini-Budget that saw rates shoot up alongside other costs of living.
“So while I am sure that, compared to then, things look slightly better now, there is no escaping the economy is still circling the drain and looking to take many households down with it.”
Darryl Dhoffer, adviser at The Mortgage Expert:
“This report isn’t necessarily inaccurate, but does frame the information in a way that could be misleading.
“The report highlights the decrease in numbers struggling compared to the previous year.
“It doesn’t emphasise the fact that it’s still significantly higher than pre-cost-of-living squeeze levels (5.8m in February 2020 versus 7.4m in January 2024).
“While it mentions new regulations coming into effect in November 2024, it doesn’t address the potential for the cost-of-living situation to worsen and the impact on those struggling currently.
“The report mentions many avoided talking to lenders despite facing difficulties.
“It lacks information on the reasons why people hesitate, such as fear of credit score damage and lender distrust.
“Overall, the report presents the data in a way that emphasizes the positive changes and available help, but it could be more transparent regarding people’s ongoing struggles and potential future concerns.”
Richard Jennings CeMAP, founder and managing director at Richard Jennings Mortgage Services:
“The article from the FCA highlights an improvement of people’s financial circumstances, but with over seven million people still saying they are struggling with making payments, it shows the economy still has a long way to go for the nation as a whole.
“The key when struggling with finances, for anyone, is to react as early as possible, and communicate with your lenders.
“It’s a hugely worrying and stressful time but lenders will work with you to find a workable solution, as it’s in their best interests, too.
“There are also free services available to help with managing finances, such as Citizens Advice and StepChange.”
Michelle Lawson, director at Lawson Financial:
“There will never be a time when everyone is doing OK.
“There will always be some that are in a dire situation and some that are financially better placed than others.
“What is important is that those struggling have access to the help, advice and support that they need.
“More innovation is needed from lenders for those mortgage prisoners stuck on a high Standard Variable Rate (SVR) with nowhere to go.”
Denni Tyson, mortgage and protection adviser at Henchurch Lane Financial Services:
“The FCA have painted a picture of optimism with this report whereas those that I speak to on a daily basis are feeling the squeeze and nervous of what is about to come.
“Don’t get me wrong, in January 2023, we were in a worst state courtesy of Liz Truss and her gang, but the FCA have painted this as things on the up.
“They are better, but not on the up until radical changes are implemented by the Bank of England and the base rate.”
