Millions facing financial difficulty after missing bill payments

Millions of people are facing financial difficulty due to unpaid domestic or credit bills, a major new study has found.

The Financial Conduct Authority (FCA), which surveyed 13,000 people, found that 4.1 million, most aged between 25 and 34, have failed to pay a bill over the past six months.

The financial regulator also warns 25.6 million consumers could be vulnerable to financial harm, meaning they lack internet access or an overdraft, so their finances would be at an increased risk if something went wrong.

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The Financial Lives research, the first of its kind from the FCA, also concluded 15 million had a “low level of resilience” to bill shock, eight million were struggling with debt and 100,000 had used an illegal money lender in the past year.

With the Bank of England set to raise interest rates, there was also a warning for those on the property ladder: one in six of those with a mortgage or renting said they would struggle if monthly payments rose by less than £50.

Rent, car loans, mortgages, credit cards, pay day loans, unsecured credit, overdrafts – “when it comes to the build up of debt, this is a classic story of supply and demand”, says BBC Economics Editor Kamal Ahmed.

“The digitisation of financial products - making many loans little more than a mobile phone swipe away - has meant that supply has become broader and easier,” he adds, “[and] historically low interest rates have also made products cheaper, meaning that taking on debt appears to be low cost, in the short term at least.”

The findings also highlighted the worrying burden of debt being assumed by young adults.