Consumer credit putting millions of Britons at risk of financial harm, says FCA

According to a study published by industry regulator the Financial Conduct Authority (FCA) on Wednesday, an estimated 4.1m UK residents had found themselves in financial difficulty as a result of missed utilities or credit card bills over the past year.

The FCA's first-ever Financial Lives report suggested that as many as 25.6m consumers displayed one or more characteristics of potential financial vulnerability after a 13,000 person survey showed that many Britons lacked adequate access to the internet or failsafe facilities such as an overdraft should something go wrong.

As wage growth had been relatively subdued of late, the report revealed a wide range of concerns among consumers, stating that around 15m people had little-to-no cushion if hit with a surprise bill.

It also said that 8m were regularly struggling with debt, 100,000 of which had used an illegal money lender at some point over the preceding year.

Coming just ahead of a long hinted rise in interest rates by the Bank of England, 17% of people paying rent or a mortgage admitted that they would struggle to meet their requirements if monthly payments were to rise as little as £50, leaving almost 5m people at risk of losing their homes, or defaulting elsewhere.

The FCA report again highlighted the issue again of the mounting levels of debt thrust upon 25 to 34-year-olds, saying that 23% of people within that age range could be considered "over-indebted."

"This exposes the story around the scale of those who are potentially in difficulty in the younger generation," said Christopher Woolard, the FCA's executive director of strategy and competition.

Although 25 to 34-year-olds were suffering the most, each generation had their "challenges", according to the FCA.

Gareth Shaw of consumer rights organisation Which?, said, "That such a high number of people in middle-age have not properly considered how they will manage in retirement should be cause for concern."

"The current complex pensions system is leading to disengagement, leaving consumers vulnerable through the real lack of information, support, and tools needed to empower consumers to make informed decisions about their financial futures," he added.

The FCA announced that the survey had provided a "wealth of information" that it would use when trying to figure how to best protect at-risk customers in the future.