The number of people struggling to meet financial commitments has fallen by 3.5m since last year, according to new figures published today by the FCA.

Its latest research for its long term Financial Lives study found that 7.4m people were struggling to pay bills and credit repayments in January, down from 10.9m in January 2023.

However, despite the improving picture the number is still higher than the 5.8m recorded in February 2020, before the cost-of-living crisis began.

Some 5.5m people said they had fallen behind or missed paying one or more domestic bills or credit commitments in the previous six months from January, down from 6.6m people a year earlier. 

Meanwhile, in the 12 months to January, 2.7m adults sought help from a lender, a debt adviser or other financial support charity because they found themselves in financial difficulty.

Sheldon Mills, executive director of consumers and competition at the FCA, said: "Our research shows many people are still struggling with their bills, though it is encouraging to see some benefitting from the help that’s available.”

The FCA reminded financial firms that they must support their customers and work with them to manage payment difficulties.

Damon Hopkins, head of DC workplace savings at Broadstone, said: “The financial services industry has a unique opportunity to drive positive outcomes, act as a force for good and in doing so shift some of the negative perception of the industry.”

Jordan Clark, Financial Planner at Quilter, said: “While we’re seeing signs of improvement, with a notable decrease in the number of people struggling to make ends meet, there’s still a significant journey ahead. While 2.7 million sought help and nearly half found relief, too many are still hesitant to speak up about their financial woes.”

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “A worrying number of people are still facing horrible challenges, include huge numbers of those on lower incomes, unemployed households, renters and single parents.”

Tom Selby, director of public policy at AJ Bell, said: “Two years of spiralling inflation was always going to have a dramatic impact on people’s spending and saving patterns, with over three-quarters of Brits spending less or working more to make ends meet in 2023.”

• The survey was conducted among 3,450 UK adults who had previously completed the FCA’s main Financial Lives survey in May 2022.  It was conducted between 8 December 2023 and 28 January 2024, with 76% of the responses provided in January 2024.