The head of the FCA was talking to the BBC as part of its ‘Money Matters’ coverage, looking at the issues of credit and debt in the UK.
In an interview with the BBC, Bailey said: “There is a pronounced build up of indebtedness among the younger age group.
“We should not think this is reckless borrowing, this is directed at essential living costs. It is not credit in the classic sense, it is [about] the affordability of basic living in many cases.”
The warning, which follows a tour of visits by Andrew Bailey to debt charities including National Debtline, coincides with new Insolvency Service figures showing the number of 18- to 34-year-olds becoming insolvent jumped by nearly a third between 2015 and 2016.
Not seeking advice
Research for National Debtline on the issue has previously found that while young people are borrowing and worrying about money, too few are seeking advice.
The charity’s Borrowed Years report found that 37% of 18- to 24-year-olds are already in debt, owing an average of £2,989 (excluding student loans and mortgages). Around half (51%) said they regularly worried about money, while one in five (21%) sometimes could not sleep as a result.
Joanna Elson, chief executive of the Money Advice Trust, the charity which runs National Debtline said: “Andrew Bailey is absolutely right to highlight the growing debt burden on young people – often to meet basic livings costs. While this trend may not yet be considered a risk on its own to the economy as a whole, debt problems at such an early age can have a huge impact on the individuals involved.
“Debt advice can make all the difference, but worryingly, far too few young people are seeking advice when they fall into difficulty. We need to do much more as a society to make sure young people get off to the best start to their financial lives.”