UK watchdog warns millions of Brits face financial difficulty
The Financial Conduct Authority (FCA) has warned that the cost of living crisis has put millions of Brits at risk of facing “serious financial problems.”
Today Brian Corr, the interim Director of Retail Lending at the FCA delivered a speech raising the alarm about widespread financial hardship at the Credit Summit 2022. Corr noted that significant financial pressures are weighing on the public with the cost of living reaching a 30-year-high in February, inflation running at 6.2 per cent – outpacing wage growth – and electricity bills up by a fifth at the start of the year.
“Low levels of resilience and rising costs are a potent combination that could cause serious financial problems for millions of people – and that could have significant implications across the credit sector,” Corr commented.
Despite the obvious difficulty faced by British consumers Corr warned firms against making it easier for people to borrow money from lenders.
“We see no case for lowering [affordability] standards – we won’t help consumers one bit by making it easier for firms to lend them money that they can’t pay back,” Corr said.
Instead, he called on firms to be reactive to the needs of consumers. “It’s never been more important for consumers to get the outcomes that they need from consumer credit markets – helping them to cope with turbulence and find their way back to stability,” Corr said.
The comments come after research from YouGov revealed that a fifth of Brits fear they will fall into problem debt this year and be unable to pay basic bills including energy bills and council tax.
Debt services are already under pressure with debt collector Ophelos telling Morning Wire that is has seen a 40 per cent to 50 per cent increase in business since the start of the year.
Read more: Consumer spending jumps a fifth as cost of living crisis deepens