Research carried out by the FCA and the government’s free money advice service website revealed that many people who were struggling financially were not seeking support because they were embarrassed.
The FCA said 42 per cent of struggling borrowers who ignored their lenders’ attempt to contact them had done so because they felt ashamed.
Two out of five people, 40 per cent, who were struggling financially, incorrectly thought simply talking to a debt adviser would have a negative impact on their credit file.
The regulator said its research showed that those who sought advice found it helpful; eight out of 10 people in financial difficulty who had received debt advice would recommend it, while 70 per cent said it had been more helpful than they had anticipated.
More than half, 52 per cent of borrowers in financial difficulty waited more than a month before seeking help, and of these 53 per cent regretted not doing so sooner.
The FCA and MoneyHelper are urging consumers to contact their lender if they are struggling to make their payments. The FCA said it had reminded lenders of the need to provide customers with help and support that took into account their individual needs and circumstances if they are struggling with their payments.
Borrowers are also being urged to contact MoneyHelper if they are worried about their finances. The government-backed service can help people find a way forward whether it is living on a squeezed income, working out how to prioritise bills and payments, or access to free, expert debt advice.
The FCA and MoneyHelper published tips for those who find themselves in financial difficulty including talking about money, prioritising debts and making a budget. They also urged people to make sure they shop around for the best rate before taking out any new borrowing.
Sheldon Mills, executive director of consumers and competition at the FCA, said: “Anyone can find themselves in financial difficulty, and the rising cost of living means more people will struggle to make ends meet. If you’re struggling financially the most important thing is to speak to someone. If you’re worried about keeping up with payments, talk to your lender as soon as possible, as they could offer affordable options to pay back what is owed.”
Caroline Siarkiewicz, chief executive of the Money and Pensions Service said: “Talking about money is more important than ever and makes many realise that they are far from alone. Taking the first step in talking about money problems can be the hardest to take but in doing so can help those get the support they need to find a way forward.
“Our MoneyHelper website provides guidance on maximising your income as well as practical help on how to talk to creditors. For those who are already struggling to keep on top of bills and financial commitments, we suggest seeking free debt advice immediately. The Debt Advice Locator Tool on the MoneyHelper website can help you find a suitable debt adviser.”
Karen Noye, mortgage expert at Quilter: “It is never too late for borrowers seek help but getting help early on can stop you spiralling into a serious situation. Lenders have lots of options available to those struggling and it’s important to let them know how significant your financial difficulties are so they can decide how best to help.”
