A total of 7.4 million people in the UK were struggling to pay bills and credit repayments in January, new research published by the Financial Conduct Authority (FCA) has warned.

While many people are battling to meet financial commitments across the country, the regulator did also highlight that picture has improved over the last year, after the latest figure was down from 10.9 million at the start of 2023.

However, the number remains higher than the 5.8 million recorded in February 2020, before the cost of living squeeze began to be more felt across the UK.

The FCA’s latest research, which was based on 3,450 UK adults who had previously completed the regulator’s main Financial Lives survey in May 2022, was carried out between December and January.

It indicated that over 5.5 million people in the UK had fallen behind or missed paying one or more domestic bills or credit commitments in the previous six months from January 2024. This was however down from 6.6 million people a year earlier.

In the year to January, 2.7 million adults sought help from a lender, a debt adviser or other financial support charity because they found themselves in financial difficulty. Nearly half (47%) of those that sought help said they were in a better position as a result, although two in five people who had fallen behind on their bills said they had avoided talking to their lender about their finances.

Executive director of consumers and competition at the FCA, Sheldon Mills, said: “Our research shows many people are still struggling with their bills, though it is encouraging to see some benefitting from the help that’s available.

"If you’re worried about keeping up with payments, reach out to your lender straight away. They have a range of support options and will work with you to agree the best one for you."

The FCA has reminded financial firms they must support their customers and work with them to manage payment difficulties. The regulator has cracked down where firms haven’t met its expectations, having secured around £60m in compensation for 270,000 customers.

Responding to the FCA’s latest findings, director of personal finance at AJ Bell, Laura Suter, commented that while the overall picture is improving, it is still “incredibly tough for many households at the sharp end of the cost of living crisis”.

“While fewer people are struggling to pay bills and fewer are falling behind with payments than a year earlier, there are still far more people who are struggling financially compared to before the current crisis,” Suter highlighted.

“The figures paint a truly divided picture. On the one hand huge portions of the population have blitzed through their savings and are now living month-to-month with no cushion to fall back on. But on the other hand, that means a very healthy majority of the population have money to spare each month – either to save, invest or spend on luxuries.

“Unsurprisingly those who are most likely to be struggling with their costs are low-income households, single parents, those who are unemployed and people who are renting.

“It’s easy to say, but people struggling with bills or debt should get some professional support to find out their options.”

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