According to recent research from Moneyhub Payments, two out of every five adults in the UK have missed a utility bill payment in the previous six months, underscoring the need for more flexible payment options.
Approximately 25% of UK adults, according to Moneyhub’s most recent financial wellbeing survey, have missed a payment of some kind in the previous six months. More than 2 in 5 (41%) of these customers who haven’t made a payment in the last six months also didn’t pay their utility bills. When it came to expecting bills to arrive or be paid, over three-quarters (77%) of the respondents reported feeling anxious. Of all the bill types, consumers were most concerned about utility bills, with 51% reporting that they cause them the most anxiety.
Rising utility costs in the UK, along with the broader crisis in the cost of living, have made consumers very concerned, as households find it increasingly difficult to stick to their monthly spending plans. Ofgem’s figures from December 2023, which showed that the UK consumer energy bill debt had reached a record £3 billion, serve as an example of the scope of the problem.
In addition to taxing the average household’s financial resources, this increase in utility prices causes profound anxiety about future affordability, especially for lower-income families and those already experiencing financial difficulties. This increases stress and uncertainty around money.
Across the types of utility bills, energy bills were unsurprisingly found to be the most stressful for consumers, with 41% saying they made them the most anxious. This was followed by water bills (14%) and broadband payments (10%).
However, there are solutions available for utility companies to support their customers, particularly those who are regularly struggling with payments. When asked what would help them manage their money or reduce instances of missed payments 38% of UK consumers said that choosing the day of the month Direct Debits are taken would make a difference. A warning before payments are expected (28%) and better oversight of their incomings and outgoings (27%) were also key solutions. In addition, 17% said the ability to pay bills weekly rather than monthly would help them manage their money. With the same percentage (17%) of respondents paid on a weekly basis, this would indicate that such a change could be truly transformative for that group.
Open Banking and Open Finance payments could offer the flexibility required by customers. With Open Banking and Open Finance payments technology, the provider can much better support the consumer by preventing situations when they are blindsided by an unexpected price increase or payment and at the same time making it very easy for the customer to pay or transfer funds.
This means that companies that provide essential services like heating, electricity, broadband, and water have another option: they can track how much the customer can afford and offer them the option to split payments in a way that suits their circumstances.
Open Banking payments enable providers to step in and take actions that would go a significant way to mitigating the issues associated with missing payments, payment anxiety and support overall financial wellness.
Mark Munson, MD of Payments at Moneyhub comments: “Missed payments are causing significant concern for UK consumers, with utility bills the number one culprit. With energy bills high, there is a real worry that this problem will only worsen without intervention.
