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50% of UK Adults Financially Vulnerable

By 24th October 2018News

50% of UK Adults Financially Vulnerable

Half of the UK population are ‘financially vulnerable’, according to a new survey by the Financial Conduct Authority (FCA), with one-in-six people unable to cope if there was to be a £50 monthly increase in their bills.

The FCA’s largest ever survey, found that 4.1 million people are already in serious financial difficulty, falling behind with their bills and credit card payments; with 25-34-year-olds being the most indebted.

The findings include:

  • 50% of adults (25.6 million people) “display one or more characteristics that signal their potential vulnerability”.
  • Just under 8 million are over-indebted.
  • 4.5 million adults have been turned down for a financial product in the last two years.
  • One in six (17%) would struggle if their monthly mortgage or rent increased by less than £50.
  • 40% of the population have confidence in the UK financial services industry.
  • About 12 million adults have received an unsolicited approach that may be a scam, and 100,000 have lost money.

The FCA defines over-indebted as having one or both of the following characteristics:

  • Keeping up with domestic bills and credit commitments is a heavy burden.
  • Payment for any credit commitments and/or any domestic bills have been missed in any three months or more of the last six.

With many in the City predicting an interest rate hike towards the end of the year, this leaves us worrying how people are going to cope. Especially as it comes at a time when householders are already struggling, as inflation outpaces pay increases.

Christopher Woolard, the FCA strategy and competition director, said: “We have talked a lot in the last couple of years about the question of financial vulnerability. This survey is the first comprehensive snapshot of the the size and scale of the issue.

“At any one point in time, 50% of the population have one or more characteristics of vulnerability. But that does not mean they will definitely suffer harm. The number who experience harm will be much lower.”

The survey, the largest tracking survey on consumers and finance in the UK, threw up a number of idiosyncracies. For example, those people who did not go to university are financially happier than those who did.

“People with no formal qualifications are more satisfied with their financial situation on average than people with qualifications. For example, 31% of those with no qualifications are highly satisfied, compared with 23% of those with a graduate or postgraduate degree,” said the report.

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