Soaring cost of living poses threat to finances warns watchdog as households face ‘at least’ £442 in energy and petrol price rises this winter

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  • FCA warns many will be in financial trouble this winter
  • More vulnerable people are at risk of being exploited by fraudulent lenders
  • Families face ‘at least’ £442 worth of energy and petrol price hikes this winter
  • If petrol prices exceed 160p per litre, bills could rise by over £700 per person

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Many families will be in financial trouble this winter as the cost of living rises and government aid runs out, the financial watchdog has warned.

With food, gas and petrol bills rising – as well as the elimination of Universal Credit cuts and furloughs – more people will find themselves in a vulnerable position and tempted by easy but costly credit.

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Unveiling its new approach to consumer credit regulation, the Financial Conduct Authority said it will work with lenders to ensure that a lifeline is thrown at the growing number of people facing financial hardship.

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Money worries: Rising cost of living will add to financial hardship, warns FCA

“We expect many people to remain or fall into financial hardship in the coming months, and will feel the impact of price hikes and temporary support measures such as furloughs and Universal Credit regeneration,” said FCA Director Nisha Arora. of consumer and retail policy.

‘We are ensuring that lenders provide the borrowers with the assistance they need when they run into difficulty.’

According to separate research by Scottish Friendly, households are facing ‘at least’ £442 worth of energy and petrol prices go up on average this winter.

But if petrol prices exceed 160p per litre, families could end up paying £700 extra per person or £1,200 more for a couple, both dependent on cars, said a UK mutual .

Petrol already rose 1.5pa-litre during September to an eight-year high of 136.8p, but as we head towards Christmas, prices are predicted to hit record highs.

With petrol and energy weighting in the basket of goods used by the Office for National Statistics to calculate inflation, the total increase in cost of living could be ‘much more’ than that, according to savings expert Kevin Brown. Scottish friendly.

Petrol prices are expected to hit record highs as Christmas approaches

Petrol prices are expected to hit record highs as Christmas approaches

“While Boris Johnson congratulated himself this week for his alleged creation of a “high-wage, high-productivity economy”, his words today fail to hide the true nature of the UK economy,’ he said.

And added: ‘Wage increases are well and good, but if the cost of living continues to rise at the same time, any of those benefits will be wiped out.’

Ofgem warned today that there will be a ‘significant increase’ in caps on energy bills – hitting millions of the UK’s poorest – as energy prices rise to push average annual bills through the £2,000 barrier for the first time. with.

As the gas crisis escalated, industry analysts suggested that the current energy limit of £1,277 would increase to £800.

Workers will have to swallow a tax increase from next year’s National Insurance hike before the cost of living rises, according to Scottish Friendly, which will deduct £254 from the average wage earner’s take-home pay.

The Institute for Fiscal Studies also warned that the council tax could rise to 5 percent each year for the next three years to pay for long-awaited social care reforms.

As the gas crisis escalated, industry analysts suggested that the current energy limit of £1,277 could rise to £800.

As the gas crisis escalated, industry analysts suggested that the current energy limit of £1,277 could rise to £800.

Meanwhile, other reports suggest that people are already spending more and saving less than in the previous quarter, as price increases lead to an increase in outgoing.

A survey of 4,000 adults by pension and retirement specialist LV= found that nearly 40 percent of those polled saw an increase in their outgoings in the past month, with 19 percent saying they were saving less.

One in five Britons said they expected their financial situation to worsen over the next three months, with more than a quarter saying they were concerned about rising inflation.

More than a quarter also said that their financial situation had worsened in the past three months.

Clive Bolton, Managing Director of Savings and Retirement at LV= said: ‘With the lockdown restrictions being lifted, the LV= Wealth and Wellbeing Monitor shows there has been a decline in consumer sentiment over the past three months, but this is the low point. Much better than. end of last year.

‘We are in a phase of adjustment as life slowly starts returning to normalcy after Kovid and the reality of living in this new environment is cutting.’

The rise in the cost of living comes as the pandemic has already severely affected some household finances.

The FCA said that between February and October last year, 20 million adults in the UK saw their financial situation worsen, and nearly 10 million saw their unsecured loans increase.

The Citizens Advice Bureau in England and Wales saw nearly 40 percent more calls about debt in August this year than they did in August 2020.

The FCA said it would crack down on bad practices among some lenders when vulnerable people face problems with loans.

In July, it warned that so-called loan packager firms were manipulating customers’ income and spending records to make them qualify for repayment schemes that pay commissions of more than £1,000.

The regulator also said that they are working on new rules for buy-now-pay-later products.

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