Last year, we reported on findings about the struggles of people in financially vulnerable circumstances around the festive period and the economic, social, and health toll it can take to navigate Christmas spend.
The balancing of covering everyday bills and essentials, on top of Christmas spending, can be overwhelming for people in financially vulnerable circumstances and last year, we found that people in financially vulnerable circumstances were cutting back, not socialising as much at festive parties, and were desperately worried about being unable to feed their families.
We suspect not much has changed from this time last year, and we will be reporting in the new year on refreshed findings of the types of products and services people in financially vulnerable circumstances use,
Since we published those findings, we’ve had a new government and a complex economic year. Inflation reached the target the Bank of England set earlier this year, which rose again above the targets set by the government in October, meaning prices for goods began to rise again.
UK Inflation has now hit the highest level for eight months, resulting in higher costs for things in shops for everyone. Beyond the % increase and interwoven with the change in the inflation rate, we’ve seen increasing rent and mortgage costs, food prices still cost more than usual, and earnings slowing down – if you are experiencing financial vulnerability, these impacts will likely hit you more than most. For many people, including those in financially vulnerable circumstances, these changes may have added to their financial difficulties, and other publications published over the last year have found troubling things for people’s finances over the past year.
On top of this, new findings from the debt advice charity Step Change have found that more than one in four people, around 14.5 million, will struggle to afford Christmas this year. To afford Christmas, people are turning to credit, including almost 4 in 10 people turning to Buy Now Pay Later. Our findings from last year indicated similarities in turning to credit for people in financially vulnerable circumstances, with 1 in 3 considering or having taken out a loan to cover expenses. Without the right access to products and services at a fair and affordable cost, debt may continue to build, and a spiral ensues.
We want to ensure that people in financially vulnerable circumstances can access the right products and services tailored to their needs, and our segmentation model can help with this. There are several ways we think mainstream financial services, including insurers, building societies, and banks can better support existing, and potential, customers in financially vulnerable circumstances with the impacts of the economic changes we’ve seen over the last year.
