According to new data from the Financial Conduct Authority (FCA), nearly 11 million UK adults have struggled to keep up with bills and credit repayments since the start of the year. This represents one in five adults who have found financial commitments to be a heavy burden. The number of people struggling has significantly increased from 7.8 million in May 2022 to 10.9 million in January 2023.
Increased Missed Payments and Mental Health Impact
The FCA’s UK-wide Financial Lives survey found that an additional 1.4 million people missed loan or bill payments, increasing from 4.2 million last May to 5.6 million at the beginning of this year. The research also revealed that the cost of living crisis is having a devastating impact on the population’s mental health, with 28.4 million people feeling more anxious and stressed in January 2023 than six months earlier. More than a quarter of respondents said they lost sleep over money worries.
Desperate Measures to Stay Afloat
The survey also revealed the measures some individuals have taken to stay afloat. For instance, one woman resorted to using credit to cover food shopping, home insurance, and car repairs. Another spent all her savings to fill her oil tank, which she relies on to heat her home. Furthermore, one mother decided to take her son off her motor insurance, while another woman stopped seeing her family as much due to the cost of driving long distances to see them. About 11% of those surveyed confessed to ignoring warning notices and leaving letters unopened.
Looking to Lower Outgoings
HSBC’s survey conducted in April found that 78% of people in the UK are proactively looking for ways to lower their outgoings. The survey found that almost half of the 2,100 respondents had slashed non-essential spending, while 40% were sticking to tighter budgets. Additionally, 45% of respondents said they wanted to reduce their grocery bills by shopping at a cheaper supermarket. Furthermore, HSBC UK said customers have typically cancelled more than 200,000 subscriptions each month on its mobile banking app.
The FCA has advised lenders to provide tailored support to people who are struggling, and HSBC is offering free financial health checks and webinars to offer personalised guidance to both customers and non-customers. People can also visit the government-backed MoneyHelper, which offers free, impartial help and advice.
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