Credit Strategy – CS – Latest News

Credit Strategy – CS – Latest News

These new figures from the credit reference agency mean around 2.7m – or one in 10 UK households – went into arrears. 

On 1 April 2022, energy regulator Ofgem increased the energy price from £1,277 to £1,971. In the three months that followed the number of households in “early delinquency” – those missing one or two bills for the first time – increased by a significant 22%, pushing delinquency rates to levels not seen for years.

Paul Heywood, chief data and analytics officer at Equifax UK, said these figures are a “warning sign of what’s to come” with the energy price cap set to increase by 80% from 1 October – going from £1,971 to £3,549. 

He said: “These figures are a warning sign of what’s to come; the early tremors in what is shaping up to be an earthquake to household finances this winter. 

“By the end of June, one in 10 households were already struggling with energy bills, but we all know this is just the tip of the iceberg; Ofgem’s changes to the price cap take two months to flow through into finances, and as winter bites this number is only going to rise. 

“The most troubling signal in all of this is the early delinquency data, the households who fell behind on utility bills for the first time between April and June this year. These early missed payments will quickly escalate into several more if swift action is not taken to provide tailored support.

“This is not the time for finger pointing, we all know someone who is worried about how they will tackle this winter, and we should all be coming up with ways to help. From the government, we need swift financial support and protection for lower income households, as we saw with mortgage holidays and other forbearance measures during the pandemic.

“The credit industry stands ready to deliver this support as it did during the pandemic, and thanks to innovations like open banking, has a far greater ability to means test this support than it did during the last major recession. 

“With warnings from energy providers that energy prices may stay high for several years, now is the time to come together, to collaborate and innovate, or we will be left with a financial legacy that lasts long beyond these high prices.”

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