Anxious and at risk’: UK’s forgotten millions teeter on financial precipice, warns consumer watchdog Which?

The UK is witnessing an overlooked and escalating financial crisis, as almost eight million people teeter on the brink of severe hardship amid rising living costs, warns consumer watchdog Which?

A recent study conducted by Which? on 4,000 individuals across the UK identifies 15% of the population, largely categorised as ‘Anxious and At Risk’, who are more likely to have resorted to credit and buy now pay later (BNPL) schemes to sustain basic living standards during the cost of living crisis.

With interest rates on a continual rise, these individuals face a significant risk of financial and mental distress in the foreseeable future.

While the government has been focusing on the ‘Drained and Desperate’ group – those with household incomes below £20,000 who have had to make severe cutbacks, this ‘Anxious and At Risk’ category has been largely overlooked. This category, which contains about 7.9 million adults, has managed to keep their heads above water by utilising credit but face an imminent financial calamity with increasing debts.

The study uncovers that six in ten of this group have seen their debt increase in the past six months – the highest amongst all groups. Furthermore, they are twice as likely (36%) to use BNPL schemes compared to the general UK population (14%).

As the Bank of England’s attempts to curb inflation by hiking interest rates, individuals with variable tracker mortgages face the prospect of a major tipping point. This concern is magnified by the fact that four in ten (38%) of the ‘Anxious and At Risk’ group have a mortgage or loan on their home.

A woman from northern England, identified in the ‘Anxious and At Risk’ group, voiced her concerns, saying, “I have to use credit to make ends meet and I worry about debt. I have no safety net for emergencies and I will have to work past state pension age.”

Expressing concern over the widespread reliance on BNPL schemes, Which? suggests that consumers are often not fully aware of the risks associated with these financial tools. The group urges the government to hasten plans to reform the BNPL industry and introduce stronger safeguards to protect consumers.

As the financial strain on households continues to intensify, Which? calls on businesses to ease pressures on household budgets. They implore energy firms, broadband providers, and supermarkets to provide better customer service and value for money, including budget items that support a healthy diet and the cancellation of future mid-contract price hikes.

Rocio Concha, Which? Director of Policy and Advocacy, summarised the stark findings, stating, “Our research reveals that almost eight million people have been left balancing on a financial knife-edge. The government must help those most in need by tightening regulation on buy now pay later to stop unaffordable lending and ensuring essential businesses are doing everything in their power to ease pressures on household finances.”