More than seven million people across the UK were estimated to be struggling with bills and credit repayments in January, according to the City regulator.
Renters, single adults with children, adults from a minority ethnic background and people living in the north east of England were particularly likely to be in financial difficulty, the research indicates.
Unemployed adults and others not in work such as the long-term sick and full-time carers were also more likely to be struggling financially compared with the UK average.
Across the research, one in seven (14% or an estimated 7.4 million people across the UK) adults felt heavily burdened keeping up with domestic bills and credit commitments at the start of 2024 – an improvement from the one in five (21% or an estimated 10.9 million people) who felt this way in January 2023.
This is still higher than the 5.8 million people (11%) who were struggling in February 2020, before the cost-of-living squeeze started.
Following similar trends seen previously, utility bills were the most commonly missed bills over the six months to January 2024, followed by credit card bills and council tax.
Renters, 62% of whom had seen rent increases in the previous 12 months, were among those most likely to report not coping financially or finding it difficult to cope in January, with half (50%) in this position.
The report quoted one unemployed female renter saying: “It’s truly awful. Most days I’m stuck deciding if I’m going to starve or be cold. We worry about what bill is coming around the corner… We survive because of the kindness of others – charity and family.”
One in nine (11% or an estimated 5.9 million adults across the UK) had no disposable income in January, which was an improvement from 15%, or an estimated 7.7 million adults in January 2023.
Around 5.5 million people (11% of those surveyed) are estimated to have fallen behind or missed paying one or more household bills or credit commitments in the six months from January 2024. This is down from an estimated 6.6 million people (12%) a year earlier.
The proportion of renters (26%) falling behind on, or missing paying, one or more of their domestic bills or credit commitments in the previous six months was more than double the UK average of 11%.
The report added: “Yet just 7% of renters had missed a rent payment in this period, highlighting how many prioritised paying their rent over other bills.”
Mortgage holders were slightly less likely than the average to be struggling in January, with 24% not coping financially or finding it difficult to cope, versus 28% of UK adults generally.
One in 20 (5%) mortgage holders had missed paying domestic bills or credit commitments in the previous six months.
More than a third (36%) of mortgage holders had seen their mortgage payments increase in the previous 12 months.
Some 1.7% had missed a mortgage payment in the previous six months, which was slightly up from the 1.1% who had missed a payment in the six months to January 2023.
A male mortgage holder was quoted saying: “Our savings have been decimated keeping up with costs.”
Another male mortgage holder said: “Food has doubled, the mortgage is up 400%, gas and electricity is up 200%. It now costs more to live than the income we get.”
The FCA is reminding those struggling to contact their lender for support. Talking to a lender about potential options will not affect someone’s credit score.
The Government-backed MoneyHelper website also has tools and tips, while debt help charities can also provide support.
There were also signs of financial struggles affecting mental wellbeing.
In the 12 months to January, due to the rising cost of living, 43% (or around 22.7 million) of adults suffered anxiety or stress.
Also in the year to January, most people (77% or an estimated 40.5 million) spent less or worked more to make ends meet.
Over the same period, the regulator estimates 2.7 million adults (5%) with financial difficulties sought help from a lender, debt adviser or charity.
Nearly half (47% or an estimated 1.2 million people) of those who sought help reported being in a better position as a result.
But around two-fifths (40%) of adults who had fallen behind on their bills had avoided talking to their lender about their finances.
More than one in five adults (22% or around 11.8 million people) cancelled an insurance or protection policy, reduced their level of cover of a policy, and/or chose not to buy a policy, in the 12 months to January, to save money or because they could not afford premiums.
This could potentially leave them without cover or with insufficient cover if something goes wrong.
Sheldon Mills, FCA executive director of consumers and competition said: “Our research shows many people are still struggling with their bills, though it is encouraging to see some benefiting 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.”
The report used a survey of more than 3,400 people carried out in December 2023 and January 2024 – with around three-quarters of responses being provided in January.
This was compared with similar research in January 2023.
A new Consumer Duty was introduced last year, requiring financial firms to put customers at the heart of what they do, including when designing products and communicating.
The FCA has also confirmed stronger protections for borrowers. It is making permanent the expectations on lenders to support borrowers in difficulty, which were introduced during the coronavirus pandemic, with additional changes to improve outcomes for consumers.
Richard Lane, chief client officer at charity StepChange, said: “In 2023, average unsecured (non-mortgage) debt among StepChange clients reached its highest level for a decade, while the charity saw a 10% rise in people seeking help with problem debt.
“While some people’s financial position may have marginally improved, the cost-of-living crisis has left others in difficult circumstances, with those on lower incomes particularly struggling to repay significant household debt and relying on credit to keep up.
“Research has shown that people in financial difficulty are often struggling with anxiety, embarrassment and stigma and tend to try and juggle their finances and cope for too long before seeking help, when they could benefit from lender support and free debt advice sooner.”
Conor D’Arcy, interim chief executive of the Money and Mental Health Policy Institute said: “The pressure of price rises may have eased, but with millions of us missing payments, it’s absolutely critical that firms consider how they are communicating with customers.”
Steve Vaid, chief executive of the Money Advice Trust – the charity that runs National Debtline, said: “No-one has to struggle alone.”
He added: “The FCA’s decision to make permanent its pandemic-era protections for people in debt is a welcome step – and the regulator has set clear expectations for firms on the crucial role that debt advice plays.”
Jordan Clark, financial planner at wealth manager Quilter, said: “Don’t stick your head in the sand. Firms have a duty to assist, and there’s help out there. Work out what you can pay back, talk to your lenders, and explore payment options.
“The FCA’s new Consumer Duty is all about ensuring firms act in your best interest, so make sure you hold them to that promise.”
