Over 4 million people now behind on household bills

On average, those in arrears owe around £1,700, with council tax, electricity, rent and water the most likely bills to be arrears.

Approximately 2.4 million people are in problem debt and just over 10 million are showing signs of financial difficulty.

Earlier this week, the Advertising Standards Authority (ASA) rebuked two firms for trivialising debt management solutions.

Credit: Andrey_Popov/Shutterstock.com

Arrears

StepChange's latest research shows 4.3 million people are behind on their household bills, with 7 out of 10 of those in this group experiencing a fall in their income since the beginning of the coronavirus pandemic.

It's estimated those customers in arrears owe £1,706 on average and they are in difficulty with the following bills:

• Council tax (38%)
• Electricity (35%)
• Rent (31%)
• Water (31%)
• Gas (25%)
• Telecoms (21%)

In addition, 7 out of 10 of those in arrears have borrowed to make ends meet, something which correlates with the Financial Conduct Authority's (FCA) assertion back in February than 27% of UK adults lack the ability to withstand financial shocks.

Citizens Advice estimated in December 2020 that an extra 600,000 households were behind on their energy bills compared to February 2020, bringing the total up to 2.1 million.

Problem debt

The figures from StepChange also show 2.4 million people are classed as being in problem debt, a slight reduction on their previous estimation of 2.87 million in their November 2020 report but still worrying.

1.9 million of these have experienced a fall in income since the beginning of the coronavirus pandemic in March 2020, yet that shows around half a million who haven't experienced a reduction in income are considered to be in problem debt too.

Of those in problem debt, 6 out of 10 have experienced hardship and the following signs of difficulty were most common:

• 50% had made minimum repayments for 3+ months
• 42% had used credit to make it to payday
• 26% fell behind on essential household bills

Worryingly, 7 out of 10 of those in problem debt also had another vulnerable characteristic alongside their financial difficulties.

The FCA issued fresh guidance to firms in February explaining how vulnerable people should be treated and what harm companies should be aware of.

Adverts banned

In related news, the Advertising Standards Authority (ASA) this week banned two adverts from companies offering debt solutions,

The first ad for a company called Wise Old Mary was said to be misleading about the amount of debt that could be written off, the speed of the service offered and the fees involved when the solution offered was an individual voluntary arrangement (IVA).

Wise Old Mary passed leads on to a third party, and ASA judged the ads did not make this sufficiently clear. They were also concerned that the service marketed itself for women in their 40s in the Facebook ad taking customers to the website.

The second ad was issued by an affiliate of Flexible Digital Solutions Ltd who say they did not sign off on the ad as it was seen on Facebook and on the website landing page.

A quiz was used to check if customers qualified for the help offered, with ASA arguing the idea of a rapid quiz suggested a quick and easy decision, risking trivialising the process of taking out an IVA.

Again, the ad failed to make clear the solution being offered to customers was that of an IVA.

Those struggling with debt should read our impartial guide on where to get help with debt. It includes information about the processes to follow and which organisations are able to help.