The number of people struggling to meet bills and credit repayments has risen by 3.1 million since May last year, the Financial Conduct Authority (FCA) has revealed.

According to figures published today by the regulator, the figure has climbed from 7.8 million last year to now reach 10.9 million.

The number of adults who have missed bills or loan payments in at least three of the last six months has also gone up by 1.4 million – rising from 4.2 million to 5.6 million over the same period.

Having repeatedly reminded firms of the importance of supporting their customers and working with them to solve problems with payment, the FCA has written to bosses across the financial services industry over the last year to make sure they are aware of the regulator’s expectations.

Where firms haven’t supported their customers properly, the FCA has told them to make changes. It reminded 3,500 lenders of how they should be supporting borrowers in financial difficulty and told 32 lenders to make changes to the way they treat customers. This work has led to £29m in compensation being secured for over 80,000 customers.

Executive director of consumers and competition, Sheldon Mills, said: “Our research highlights the real impact the rising cost of living is having on people’s ability to keep up with their bills, although we are pleased to see that people have been accessing help and advice.

“If you’re concerned about your finances, you do not need to worry alone. We've told lenders that they should provide support tailored to your needs. And, if you find yourself in debt or want to know more about how to manage your finances, free expert advice is available.

“We will continue to act quickly to make sure financial firms help their customers who are facing financial difficulty or are worried they might be soon.”

As part of its Financial Lives survey, the FCA found that the cost of living is having a significant impact on people’s mental wellbeing. Around half of adults in the UK, equating to 28.4 million people, in felt more anxious or stressed in January this year due to the rising cost of living, compared to six months earlier.

Responding to the FCA’s latest figures, managing director for retail at Standard Life, Dean Butler, said: “Rising prices and borrowing costs have hit people hard in the past 12 months and are having a real effect on how people think about and manage their money. While not unsurprising, it’s still alarming to see the rise in financial vulnerability and how the continued impact of inflation and rising prices is chipping away at people’s financial resilience.

“The knock-on impact will undoubtedly affect people’s confidence and decision making both day to day and longer term. For many, ways of lessening the impact now such as dipping into rainy day savings may become increasingly unviable as limited funds run out.

“Other ways to cope such as cutting back on long-term savings are certain to have long-term consequences. A real concern now is that people end up dealing with the fallout from this unsettling time for years to come with depleted saving and underfunded retirements.”

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