FCA figures will increase concern among policymakers over how British households will cope with an interest rate rise

Half of the UK population are financially vulnerable with one in six people unable to cope with a £50 increase in monthly bills, according to a survey of Britain’s personal finances by the City regulator.

The Financial Conduct Authority’s biggest ever survey of households found that 4.1 million people are already in serious financial difficulty, falling behind with bills and credit card payments, with 25- to 34-year-olds the most over-indebted.

The FCA’s Financial Lives survey of 13,000 consumers is an attempt by the regulator to assess how many individuals are facing financial harm – and it paints an alarming picture of growing debt and credit problems across the UK.

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Its 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 figures will increase concern among policymakers over how British households will cope with a rise in interest rates, with many in the City expecting a hike before the end of the year.

It also comes at a time when households are facing a squeeze on their income as inflation outpaces pay increases.

The report reveals a deep generational divide, with just 1% of over-65s defining themselves as “in difficulty” compared with 13% of 25- to 34-year-olds.

The average cash savings held by the over-65s is £45,000, and 83% have no debts. But among 25- to 34-year-olds, 19% have no savings, and a further 30% have less than £1,000 saved. The survey found 36% had been overdrawn in the last 12 months, and 37% had taken out payday loans.

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.”

Woolard said that while there had been a “sharp uptick” in the level of consumer debt in the UK, the financial regulator was not at fault. Many of those in debt have experienced misfortunes the regulator could not control – such as divorce or unemployment – but he added that the survey showed the FCA had work to do to improve the financial resilience of the UK.

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.

It also tried to quantify the age-old question about whether having more money really makes you that much happier. The figures suggest it does – but not by much.

The survey found that 19% of households with an income of under £15,000 were “highly satisfied” with their financial circumstances. But this only rose to 25% for people with a household income of £50,000 or more.

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