21 October 2022
If you are covering the FCA’s Financial Lives Survey findings, please find below a comment from Tracy Crookes, financial planner at Quilter:
“The Financial Lives Survey from the FCA shows just how precarious household finances were earlier this year, and that the situation is likely to have only deteriorated since then as cost-of-living pressures intensify. Pandemic savings have acted as a buffer, but are likely to be getting eaten into at an alarming rate, and with a quarter of adults having low financial resilience, we are walking into a ticking timebomb.
“Clearly there has been some support offered to help alleviate some of the worst of the price rises, in particular around energy bills, but this survey shows that it is more vital than ever that people proactively seek out various support schemes and see if they are eligible. According to the FCA, 24 million people are already finding it a burden keeping up with rising bills and credit commitments – a staggering statistic that suggests this crisis is hitting a large part of society hard. Every little is going to help as inflation remains stubbornly high and wages fail to keep pace.
“Unfortunately, as this crisis unfolds, people are turning to debt, which in turn is accounting for the increase in adults with low financial resilience compared with pre-pandemic. The FCA has witnessed a rise in the number of people who have missed credit repayments or fallen behind on household bills. These payments often come with the most punitive of interest rates and penalties and thus will be deepening the crisis faced by many. Support and guidance for these affected households need to be more widely available so people think twice about getting themselves into more and more debt, and that if they need to take on additional credit, they do so in the most efficient and effective way possible.
“The impact of the pandemic has only made these statistics worse and point to a necessity to take long term action that gets to the root cause if we are truly to increase financial wellbeing within the nation. It remains absurd that financial education is still not recognised as a vital part of the UK primary school curriculum. We know that money consciousness and attitudes are formed by the age of seven and yet we are not helping younger populations form a positive relationship with money. The younger we can ingrain positive personal finance habits, the better society will be prepared for the next crisis.”
