Fair4All Finance research finds 20.3 million UK adults in financially vulnerable circumstances

Fair4All Finance has published research indicating that 20.3 million people in the UK are now living in financially vulnerable circumstances, up 16 per cent from 17.5 million people in 2022¹. The figures were reported by the Finance & Leasing Association (FLA) on 16 July 2024¹. Fair4All Finance is described as a not-for-profit organisation that focuses on fostering access to fair and affordable financial products and services¹.

The research suggests that almost three million people have fallen into financial difficulties over the last year, with 44 per cent of UK adults subsequently now living in financially vulnerable circumstances¹. It relies on a customer segmentation approach undertaken in partnership with Trajectory and CACI, and focuses on six groups of adults living in financially vulnerable circumstances¹. The causes of financial vulnerability range from ill health, unstable incomes or a lack of savings to life events such as losing a job, bereavement or a relationship breakdown¹.

The number of homeowners or renters managing higher than average long term debts from multiple sources has risen by 57 per cent to 3.4 million people over the last year, a trend that has affected 1.3 million people who were not previously struggling financially¹. Fair4All notes that many people in this group are using personal loans to cover rent or mortgage payments, taking out high-cost payday loans, or unregulated deferred payment products (BNPL), and are struggling to manage their debts due to stigma or a lack of financial awareness¹. The FLA also cites a separate report by the Centre for Social Justice estimating that 1.08 million people are using a loan shark, a three-fold increase, with an average loan of around £2,500 increasingly used to pay for food and fuel, and notes the problem is UK-wide and not solely focused in urban areas¹.

Why it matters for households

The research puts the share of UK adults in financially vulnerable circumstances at 44 per cent¹. The rise is concentrated in part among homeowners and renters carrying higher than average long term debts from multiple sources, a group that has grown by 57 per cent to 3.4 million people over the last year, including 1.3 million people who were not previously struggling financially¹. Fair4All reports that many in this group are using personal loans to cover rent or mortgage payments, high-cost payday loans, or unregulated deferred payment products (BNPL)¹. The FLA's account also cites an estimate that 1.08 million people are using a loan shark, a three-fold increase, with an average loan of around £2,500 increasingly used to pay for food and fuel¹. The research describes the problem as UK-wide and not solely focused in urban areas¹. The findings sit alongside wider work on regulation and policy covering credit and financial inclusion.

What happens next

Fair4All has called for the development of a national financial inclusion strategy, building on its Financial Inclusion Plan, and for the financial services sector to work together to make the market fairer and more accessible¹. The FLA states it strongly supports the development of a financial inclusion strategy and closer collaboration between stakeholders¹. The FLA held its first Access to Credit symposium in October 2023, and says a follow-up symposium is planned for mid-October, which will bring stakeholders, including Fair4All Finance, together to discuss next steps and opportunities for collaborating on a financial inclusion strategy¹.