Please find the official publication from the FCA here.
Dear Chief Executive,
The rising cost of living – acting now to support consumers
As consumers across the country are affected by the rising cost of living it is critical that lenders meet the standards we expect to support their borrowers, including those in financial difficulty.
We want to ensure that our expectations of you are clear and to urge you all to support your customers. We need to engage and work effectively as an industry to understand the changing pressures on consumers – now and in the uncertain months ahead. We must ensure that the financial services sector serves customers – especially those who might struggle with their finances during this time.
Understanding the changing pressures on consumers
Many consumers will feel the impact in their personal finances, but we are particularly concerned that consumers least able to bear the rises will be hardest hit. While the headline average inflation rate is at 9% and rising, the Institute of Fiscal Studies estimates that the poorest households may face average inflation rates as high as 14%. This is in the context of a quarter (27%) of the population having low financial resilience, a figure likely to increase over the coming months.
At the same time, we expect to see higher demand for credit, although rising interest rates, and lower disposable income, may make borrowing less affordable, or unavailable, for some. Firms will also see a wider group of consumers in financial difficulty, who will find it harder to pay their debts. Some of these consumers will be in vulnerable circumstances or may be experiencing financial difficulty for the first time. Firms need to remain alert to the changing situation of their customers and target their efforts in response.
To continue reading, please find the official publication from the FCA here.