More than 7.4 million people in the UK struggled to pay a bill or a credit repayment in January, according to a financial regulator.
The figure is less than last year but is still significantly higher than before the cost of living crisis began.
According to the Financial Conduct Authority (FCA), which tracks the number of households in financial difficulties, 5.8 million people reported that they were struggling to pay a large bill in February 2020.
The data, which gives an insight into the UK’s personal finances, showed that by January 2023, after the Russian invasion of Ukraine and the subsequent cost of living crisis, the number of people in financial difficulties almost doubled to 10.9 million.
The regulator is reminding consumers in financial difficulty that lenders are obliged to listen to customers’ concerns. Talking to a lender about their options would not affect a customer’s credit score, it said.
The FCA said 2.7 million people sought help from a lender, a debt adviser or other financial support charity in the year up to this January. Nearly half (47%) of those who sought help said they were in a better position as a result. However, worryingly from the FCA’s perspective, two in five people who had fallen behind on their bills said they had avoided talking to their lender about their finances.
Laura Suter, director of personal finance at AJ Bell, said that while the overall picture was improving, it was still “incredibly tough for many households”.
She said: “The figures paint a truly divided picture. On the one hand, huge portions of the population have blitzed through their savings and are now living month-to-month with no cushion to fall back on: the figures showed that 11% of people have no disposable income each month. But on the other hand, that means a very healthy majority of the population have money to spare each month – either to save, invest or spend on luxuries.”
The FCA has reminded financial firms they must support their customers and work with them to manage payment difficulties.
Sheldon Mills, executive director of Consumers and Competition at the FCA, 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.”