The financial watchdog has urged struggling consumers to seek help as soon as possible after witnessing an increase in people worried about money due to the rising cost of living.
The Financial Conduct Authority (FCA) and the Government-backed MoneyHelper platform have warned that millions of people may be missing out on support due to feelings of shame from seeking help.
Sheldon Mills, executive director of consumers and competition at the FCA, told the PA news agency that the organisation and lenders have to be proactive to ensure vulnerable consumers are supported.
“We are seeing a really serious and clear increase in economic stress,” he said.
“Inflation is continuing to increase, with figures at over 9%, but reports have highlighted that this is often a lot worse for the poorest so we have to be well-positioned to help those individuals.
“The survey we completed showed that people were feeling the pressure but also that they were worried about talking about it. We obviously want to highlight just how important it is people do talk.”
Research by the FCA and MoneyHelper found that 42% of borrowers who were struggling and ignored their lenders’ attempt to contact them had done so because they felt ashamed.
More than half (52%) of borrowers in financial difficulty waited more than a month before seeking help, according to the data, which covered the six months to the end of March.
Mr Mills also said the FCA is working to ensure people have access to support from their banks and responsible operators such as credit unions, to ensure people avoid illegal lenders.
“If you’re struggling financially the most important thing is to speak to someone,” he said.
“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.”
It comes weeks after the FCA wrote to high street banks and lenders, calling for them to be prepared for increased demand from consumers in financial difficulty.
Caroline Siarkiewicz, chief executive of the Money and Pensions Service, said: “We know many people are currently feeling increasingly worried about money as the cost of living rises and many may turn to different forms of borrowing to help.
“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.”