[INSIGHTS] : Financial Lives Study Update

An update on the Financial lives study today from the FCA. Unfortunately, it does not seem to be getting better for many consumers.

Separately I have also been analysing the early release data from the FCA. The Interactive graphic is pasted below for you to have a look and explore of the data too.

A couple of observations

  • % consumers with low resilience appears to be increasing
  • % Increase is in the 55-64 age range, more in London and South West
  • Keeping up with Domestic bills is increasingly a burden, driven by retirees and 55-64 age ranges
  • Debt owed has gone down (expenses have gone up)
  • Consumers have lower financial resilience with a shorter time until they exhaust buffer funds

This points to consumers in work, increasingly being stretched by increased expenses.

Article Summary

The Financial Conduct Authority (FCA) has released findings from their Financial Lives cost of living survey, which highlights the financial challenges faced by UK adults in the six months leading up to January 2023. The survey reveals an increase in the number of adults missing payments or struggling with credit commitments, with 5.6 million adults (11%) missing payments compared to 4.2 million (8%) in May 2022. Additionally, 10.9 million adults (21%) felt that making these payments was a heavy burden, up from 7.8 million (15%) in May 2022. The rising cost of living has also impacted mortgage and rent payments, with 29% of adults with a mortgage and 34% of renters experiencing payment increases. Mental wellbeing has been significantly affected, with over 28 million adults feeling more anxious or stressed due to the rising cost of living.

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Key Points

  • The number of adults missing payments or meeting credit commitments increased from 4.2 million (8%) in May 2022 to 5.6 million (11%) in January 2023.
  • 10.9 million adults (21%) felt that making these payments was a heavy burden, up from 7.8 million (15%) in May 2022.
  • 29% of adults with a mortgage and 34% of renters experienced payment increases in the six months leading up to January 2023.
  • 13% of insurance or protection policyholders (6.2 million people) cancelled and/or reduced the level of cover on their policies to save money due to the rising cost of living.
  • Over half (28.4 million) of UK adults felt more anxious or stressed due to the rising cost of living.
  • Some individuals shared personal stories of the impact of the rising cost of living on their lives.
  • Positive stories were also shared about proactive support and appropriate forbearance from credit or mortgage lenders.

Key Takeaways

  1. The number of UK adults struggling with payments and credit commitments has increased, highlighting the impact of the rising cost of living.
  2. Mortgage and rent payment increases have added to the financial burden faced by many adults.
  3. Mental wellbeing has been significantly affected, with over half of UK adults experiencing increased anxiety and stress.
  4. The survey emphasizes the importance of early support for consumers facing financial difficulty.
  5. The FCA encourages individuals struggling with payments to contact their lender or insurance provider for assistance.

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