11 million UK residents struggling with bills
New FCA findings have shown that almost 11 million people in the UK are now struggling to pay their bills and repay debts. These are staggering figures, with 3.1 million additional people now facing financial difficulties in January 2023 (compared to May 2022).
11% of UK adults have missed bills in the last 6 months
The Financial Conduct Authority (FCA) have found that 11% of adults in the UK have missed 3 or more bill payments within the last 6 months. This includes bills for energy, credit cards, mortgages, finance agreements and more. This data was gathered was following a survey of more than 5,000 people across the UK.
The Financial Conduct Authority have now made it clear to financial businesses that their top priority needs to be supporting customers during this difficult time.
Inflation has soared to more than 10% over the last year. This means prices of goods and services are far higher than this time last year. This combined with consistently increasing interest rates has put pressure on finances across the country.
This has led to millions of people facing payment difficulties and even cancelling financial commitments such as insurance policies.
More about interest rates and inflation:
- MPO Interest Rate Update May 2023
- New interest rate predictions for UK in 2023
- Should you cancel over 50s life insurance due to inflation?
What if I can’t afford my energy bills?
Energy costs have been a main area concern for many UK homeowners and renters. Though there are several support schemes in place, bills have been steadily increasing over the last year.
Here are some of our top tips for if you are having trouble with your energy bill payments:
- Speak to your energy supplier about a payment plan: If you are behind with your payments, it is best to speak to your supplier as soon as possible. A payment plan can show the lender you are willing to repay the amount owed in set instalments over a reasonable time.
- Look into support schemes and benefits: People on certain benefits e.g. pension credit can be eligible for additional support with their energy bills.
- Ask if your supplier has a support fund or grant available: Many energy suppliers will offer grants to struggling customers to help them repay energy debts. Even if your supplier doesn’t offer one, anyone is eligible to apply for a British Gas Energy Trust grant.
- Customers on prepayment meters can claim additional support: If you are on a traditional prepayment meter, you can claim government energy bill support vouchers.
Cost of living support 2023
There are a few different cost of living support schemes available to help support vulnerable UK residents. Some of the main forms of support available include:
- Cost of living payment for low income benefits and tax credits: If you receive certain benefits or tax credits (e.g. Universal Credit), you can receive cost of living support payments. These are payments of £301, £300, and £299.
- Disability cost of living payment: If you receive one or more disability related benefits, you may be entitled to a support payment of £150 in Summer 2023.
- Pensioner cost of living payment: Pensioners eligible for Winter Fuel Payments will receive an additional payment of £150 or £300. The amount you receive will vary depending on your circumstances.
Find out more – Gov.uk – Cost of Living Payments 2023 to 2024
Note: These payments should be distributed by your local council automatically. You shouldn’t need to apply as you will receive payments if you are eligible.
More about UK cost-of-living support:
- Cost of living payment dates 2023
- Energy price guarantee is extended by 3 months
- New lower Ofgem price cap announced
What to do if you can’t afford your mortgage payments
It is understandable if you have had difficulty with your mortgage repayments within the last year. 29% of mortgage holders and 34% of renters have faced rising payments within the last 6 months of 2022.
32 UK lenders have been warned by the FCA to adjust the way they treat customers facing payment issues, with a stronger focus on support. There has also been discussion of the FCA clamping down harder on ‘aggressive’ debt collection procedures, to avoid additional stress and anxiety for customers.
As we previously reported, monthly mortgage payments have gone up nearly 60% in the UK within the last year. You may now be facing far higher bills than ever before and be struggling to repay your mortgage as a result.
If you are struggling to pay your mortgage, there are a few things that can help:
- If you think you won’t be able to afford your next mortgage payment, speak to your lender immediately: Many lenders have support available and some can offer authorised ‘payment holidays’ to help you avoid mortgage arrears.
- Think about what is affordable for you, before speaking to your lender: This gives you and the lender a better idea of how to get you out of this situation.
- Don’t wait until after you have missed a payment before speaking to your lender: Lenders can be more understanding and supportive than you might think.
- Ask if you can reduce your payments temporarily: Your lender may agree to lower repayments for a set amount of time, which can be more affordable for you. Generally, a lender will prefer lower payments rather than none.
Note: If you need to change your mortgage payments after talking to your lender, you will need to write them an offer letter. This letter will need to explain why you are having trouble with your mortgage payments, what you can afford to pay and how you can repay any outstanding payments (arrears).
If you are having problems with your mortgage or your lender, it can be helpful to speak to a qualified mortgage broker for extra support and advice.