Research: Consumers lacking awareness of debt support

by Tim Tomlinson - Executive Client Director, Financial Services
| minute read

As inflation grips the UK, causing a cost of living crisis for many, consumers are looking for help in making ends meet. They’re facing rapidly increasing costs of food, utilities and all manner of consumer goods, caused at least in part by longer term effects of the Covid pandemic, the war in Ukraine, and lingering impacts of Brexit.

How are today’s consumers coping with these challenges? And where are they turning for support?

We asked 1,000 UK consumers (representative of the population by age, gender, region and socio-economic status) a range of questions about their current financial situation, as well as how they might react if things changed.

Let’s take a look at the results.

1 in 5 struggling to pay bills

We asked our sample of 1,000 people if they feel able to pay all of their bills. 19% of respondents said that they were ‘not overly confident’ or ‘not confident at all’ in keeping up with all of their payments. This is a significant proportion of the population – approximately 12.5m adults – who will have some tough decisions to make. Which bills are prioritised? Where can cost savings be made? This is a huge challenge for all consumers, especially those in a vulnerable situation.

For lenders, not only does this indicate large levels of default on the books, it also suggests a hefty burden for customer service teams across the board. Providing such a large proportion of the customer base with considered, appropriate and inclusive support, is likely to put a strain on already stretched resources.

An unexpected bill

While 88% of our respondents were very or fairly confident in managing their money overall, it’s important that people are prepared for the unexpected. Unfortunately there’s a disparity in those who are confident overall, and those who could cope with unforeseen expenditure.

When asked if they would be able to pay an unexpected bill, 30% aren’t confident – significantly less than the 88% who are confident in managing their finances. Financial shocks, like we’ve seen with interest rate rises, inflation and the pandemic will have all come as a surprise to many consumers.

Of those who said they would struggle to pay an unexpected bill, more than half (59%) would turn to friends and family for financial support.

More worryingly however is the 15% who would do nothing. There may be a few different reasons as to why people would choose to do nothing when faced with being unable to pay one or more bills 

  • embarrassment,
  • a lack of knowledge of the support that is available,
  • a lack of access to the support that is available,
  • fear, or
  • something else.

Whatever the reason, lenders have a duty to do what they can to provide the necessary support to all customers facing financial difficulty. However, our research discovered that over a third (38%) of respondents who had a loan or mortgage were fairly or very uncomfortable in contacting their lender for support if they were behind on repayments. This may be contributing to the 15% above who would ‘do nothing’ if they were in difficulty.

Proactive support

To help bridge this gap, lenders could be more proactive in identifying vulnerability, and providing support before customers end up in default. Breaking down the barriers of fear and embarrassment, while building up levels of education in consumers, would go some way in helping people who are in financial difficulty.

When asked if their bank made them aware of the free debt advice that exists (e.g. StepChange, Citizens Advice Bureau, MoneyHelper, PayPlan, National Debtline) over half (51%) said ‘no’ and a further 22% said they don’t know or weren’t sure.

In fact, when we asked our survey panel what their first port of call would be if they were falling behind in payments, 29% said ‘friends or family’. Only 1 in 10 (9%) would approach a money charity or organisation like Citizens Advice Bureau. Encouragingly, 44% would approach the bank or the company they owed money to. However, as stated above, over a third of people would feel uncomfortable in doing so. This needs to change.

In summary

The challenge for lenders to overcome is how to proactively identify customers in vulnerable situations, and then being able to pre-emptively identify their needs using data and analytics. By predicting behaviours, lenders will become better equipped to effectively support customers throughout their financial lifecycle with personalised contact strategies, delivered at scale.

Those contact strategies should include the independent support that’s available from organisations like StepChange, the Citizens Advice Bureau and others. Each customer is individual, with a unique set of circumstances. To deliver personalised support at scale, there needs to be a full omnichannel ecosystem of help, throughout the current cost of living crisis and beyond.




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