According to a survey conducted by the Financial Conduct Authority (FCA), approximately 6 million British borrowers faced recurring difficulties in meeting bill payments

between September and January. The steep rise in living costs and higher interest rates were cited as key factors contributing to this trend.

Since September, British households have experienced double-digit inflation, with government budget forecasters predicting a significant decline in living standards until March 2024.

The FCA survey revealed that the number of adults in the UK who missed payments on domestic bills or failed to meet credit commitments in three or more of the six months leading up to January increased from 4.2 million in May 2022 to 5.6 million.

Sheldon Mills, the FCA's Executive Director of Consumers and Competition, emphasized the real impact of rising living costs as highlighted by the research.

The FCA began collecting this data in May 2022, following Russia's invasion of Ukraine, which resulted in soaring energy and food prices. The survey gathered responses from 5,286 individuals who participated in the previous survey conducted in May 2022, between December 6 and January 16.

The survey also indicated a significant rise in the number of people struggling to keep up with payments, accounting for one in five adults.

With the Bank of England raising interest rates sharply to combat inflation, 29% of respondents with mortgages reported increased payments between May 2022 and January, while 34% of tenants experienced higher rent costs.

Karen Noye, a mortgage expert at Quilter, noted that the convergence of higher living costs and interest rates has pushed many individuals' finances to their limits.

Another report from the Resolution Foundation highlighted that approximately 1.6 million British households are yet to face an average increase of £2,300 in their fixed-rate mortgage bills over the next two years.

Richard Lane, Director of External Affairs at debt charity StepChange, revealed that demand for advice services has reached its highest level in three years, with many people struggling to cope with "once-in-a-generation" price rises.

The FCA has called on lenders to offer tailored support to consumers facing financial difficulties and announced plans to introduce its Consumer Duty rule in the coming months, which will require firms to provide improved support to their customers. Photo by Katie Chan, Wikimedia commons.