An reckoned 4.1 million people are in financial difficulty owing to missed private or credit bills, a major study has found.
These consumers – scad likely to be aged between 25 and 34 – have failed to pay reckonings in three or more of the last six months.
The findings come as part of a measure of 13,000 people by the regulator, the Financial Conduct Authority (FCA).
It suggests 25.6 million consumers could be unshielded to financial harm.
This means that they display at scarcely one of a series of issues, such as lack of internet access or an overdraft, so their capitalizes would be at an increased risk if something went wrong.
The Financial Lives research, the first of its kind by the regulator, revealed a classify of concerns among consumers at a time of weak wage growth, but also low-cost acclaim.
It concluded that 15 million people had low levels of resilience to a tabulation shock, that eight million were struggling with obligation, and 100,000 had used an illegal money lender in the last 12 months.
One in six (17%) of those with a mortgage or who are grease someones palm rent, an estimated five million people, said that they would contest if monthly payments rose by less than £50.
A rise in interest tariffs, heavily hinted by policymakers at the Bank of England, could affect divers of these people – especially if the Bank rate rose rapidly.
Scrutiny: Kamal Ahmed, economics editor
Rent, car loans, mortgages, trust cards, pay day loans, unsecured credit, overdrafts – with real wages destruction, the amount of debt we are taking on is rising and the pressure we are under is increasing.
For numberless, a savings cash buffer to deal with shocks and rising prizes is non-existent.
When it comes to the build up of debt, this is a classic release of supply and demand.
The digitisation of financial products – making many credits little more than a mobile phone swipe away – has meant that reserve has become broader and easier.
Historically low interest rates have also total products cheaper, meaning that taking on debt appears to be low get, in the short term at least.
Read Kamal’s blog in full
In the constant week as the BBC News Money Matters series revealed worrying ties of debt among young adults, the FCA report highlights the issue again for 25 to 34-year-olds.
Its discoveries show that 23% of consumers of this age were “over-indebted”, the highest part of any age group.
The report also found that this group were most qualified to be in difficulty (13%) or just surviving with their finances.
“This [examination] exposes the story around the scale of those who are potentially in difficulty in the green generation,” said Christopher Woolard, executive director of strategy and game at the FCA.
Problems at every age
He added that there were “challenges” turn up by every age group and that flexibility was required to ensure that these different issues were tackled.
The report revealed:
- Among 18 to 24-year-olds: 20% had no reserves and 55% had debts, primarily student loans. Single parents are most expected to use high-cost loans
- Among 25 to 34-year-olds: Nearly half (48%) were ripping but of them, only a quarter (24%) had contents insurance
- Among 45 to 54-year-olds: An above-average division (15%) had an interest-only mortgage, so had not yet started paying off the capital of their at ease loan. They also had high overdraft and credit card equiponderances
- Those aged 55 and over: a third (33%) said that the voice pension would be their main source of income – an income which allotment experts say would be insufficient
- Those aged 65 and over: Sundry than a third (35%) do not use the internet and so miss out on cheaper deals, but of those who do, they are minor likely to check that a website is secure, leaving them divulged to scams
Gareth Shaw, from consumer group Which?, suggested: “That such a high number of people in middle-age have not decently considered how they will manage in retirement should be cause for relevant to.
“The current complex pensions system is leading to disengagement, leaving consumers weak through the real lack of information, support and tools needed to empower consumers to convert informed decisions about their financial futures.
“Today’s catch on ti should spur on the FCA to take action to deliver a consumer-friendly pensions approach that everyone can engage with.”
The FCA said that the survey transfer provide a “wealth of information” that would be used when determining how to protect vulnerable consumers in the future.
A Treasury spokesman said the management had tightened rules “to ensure that money can only be lent to people who can provide to repay”.
“We have also cracked down on pay day loans, saving borrowers over with £150m a year, and are introducing an energy cap to help people with household reckonings,” he added.
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