17 May 2023
If you are covering the FCA Financial Lives press release, please see the following comment from Karen Noye, mortgage expert at Quilter:
"According to new data from the Financial Conduct Authority (FCA), the cost of living crisis is weighing heavy on people’s ability to meet their financial commitments. The FCA found that the number of people struggling to meet their bills and credit repayments has risen significantly, by 3.1m, since May 2022.
"In addition, the number of adults who missed bills or loan payments in at least three of the last six months has risen by 1.4 million. This should come as no surprise as increases in interest rates have pushed mortgage bills and the costs of other forms of debt much higher than people have been used to. While the pandemic no doubt caused many financial shocks, particularly for the self-employed, the cost of living crisis arguably has played a much greater role in damaging people’s financial wellbeing. The convergence of higher living costs and higher interest rates has pushed people’s finances right to the edge and sometimes over. This is having a huge impact on our mental wellbeing with the FCA finding that around half of the UK are more stressed or anxious about money.
"If you are in a situation where you are struggling with your mortgage bills or other debt it doesn't need to spell disaster. The FCA has been working to remind lenders of the necessity of supporting their customers and working with them to resolve payment issues. We are hopefully nearing the peak of interest rates but with energy bills still eye-wateringly high and stickier than hoped inflation we are still far from out the woods. If you are struggling the following points are crucial to take heed of:
Don't bury your head in the sand
"It's crucial to note that firms are obligated to help their customers. If you're among those having difficulties, remember that help is available. Don't wait until the situation becomes unbearable, reach out to your lenders as soon as possible. The FCA has reminded 3,500 lenders about the support they should be providing to borrowers in financial difficulty.
Work out what you can afford to pay back
"The FCA has been proactive in its approach to ensure fair treatment for customers. It has instructed 32 lenders to change the way they treat their customers, a move that has led to £29 million in compensation for over 80,000 customers. Before you reach out to your lender, take some time to work out exactly how much you can afford to pay back. There are budgeting tools and free expert advice available to help you manage your finances.
Discuss ways of making payments
"The FCA has also highlighted the importance of mental well-being in the face of rising living costs. Its Financial Lives survey found that around half of UK adults felt more anxious or stressed due to these rising costs. If you're feeling this way, reach out and discuss ways of making payments with your lender. Remember, you're not alone, and there are ways to manage your finances during these challenging times. The FCA will continue to act quickly to ensure financial firms help their customers who are facing financial difficulty. The organisation will also introduce the Consumer Duty in the summer, a new measure that will require firms to act to deliver good outcomes for consumers and ensure that they are properly supported while using a financial product or service."
