Andrew Bailey, chief executive of the Financial Conduct Authority (FCA), has issued a stark warning about a "pronounced" build-up of debt among young people in the UK. In an interview with the BBC, Bailey said that younger individuals are increasingly borrowing to cover basic living costs, reflecting a shift in generational wealth patterns.
Bailey emphasised that this borrowing is not reckless but is instead directed at essential expenses such as rent and daily necessities. He noted that lower real incomes and reduced asset ownership among the young have contributed to higher indebtedness. The FCA is closely examining high-cost lending schemes, including pay-day loans and rent-to-own charges for white goods, which Bailey said he "did not like".
The regulator cautioned that consumers and lenders should be mindful of potential future interest rate rises and stressed the importance of affordable credit. Recent Bank of England figures show unsecured consumer debt, excluding mortgages, has exceeded £200bn, growing at 10% per year. Despite this, Bailey said the situation is not a macroeconomic crisis, though it poses significant challenges for affected individuals.
Bailey also highlighted the role of the gig economy and erratic income flows in driving demand for credit. He argued that sustainable credit remains a necessary part of society, but warned against practices that leave vulnerable borrowers exposed to high costs.
