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Wednesday, October 01, 2025
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TotallyMoney Warns 23.3 Million Adults May Now Be Locked Out of Accessing Mainstream Financial Products and Services

New TotallyMoney research found that 23.3 million adults are now locked out of accessing mainstream financial products, which is driving growth in unregulated and illegal money lending:

  • 23.3 million adults are unable to access mainstream financial products (under-served), including credit cards and loans — an increase of 3.14 million (15.5%) in just two years*
  • This comes as 7.4m (14%) feel heavily burdened by their domestic bills and credit commitments†, and millions are borrowing to plug the gap — credit card balances grew from £56.2bn. to £64.8bn. (15.3%)‡ over two years, and in just 12 months more than 9 million adults were declined for credit§
  • In addition to withdrawing offers from the market, banks are hiking rates and fees, while restricting who they’re willing to lend to¶
  • The credit vacuum has been filled by unregulated and illegal money lending, with 14 million adults now using BNPL#, and 3 million turning to loan sharksΔ

Alastair Douglas warns that while inflation has slowed, prices remain considerably higher than prior to the crisis, meaning people will continue to struggle financially.

Three’s the tragic number

In 2022, TotallyMoney published a whitepaper with PwC which found that 20.2 million UK adults were locked out from accessing mainstream products and services. Our latest calculations estimate that this has continued to grow to 3.14 million in just two years, now reaching 23.34 million — and making up 45% of the UK adult population◊. This is being driven by three key factors:

  1. People’s finances: High inflation has squeezed disposable incomes, and with 7.4 million adults feeling heavily burdened by their bills, 5.5 million have missed a payment. People are becoming increasingly reliant on credit, with card balances ballooning and BNPL usage booming.
  2. Credit crunch: Higher rates, tighter regulation, and customers struggling to keep up with commitments means lenders have pulled products, restricted who they lend to, and hiked fees and rates. More than nine million adults were declined for credit in just 12 months.
  3. Credit reports: Credit reports have failed to evolve with society, and don’t fully recognise renters, gig workers, freelancers, the self-employed, and those with little or no credit history (thin file). But they remain the backbone for most lending decisions, meaning millions of people are being left behind through no fault of their own.

This under-served population was first tracked in 2016, and was then estimated to be 13.6m people**. Since then, it’s grown by 71.3%, to 23.3 million people. And with people now at greater risk of missing payments, being rejected for credit, or damaging their credit files, the worry is that this trend will continue.

Under-served and overstretched

Being under-served means you’re unlikely to have access to mainstream financial services, such as high street credit cards, loans, and even overdrafts or mobile phone contracts. Instead, the products you might be eligible for will come with higher APRs, bigger fees, and shorter 0% offer durations — making them more expensive, and less affordable.

To put this into context, 50% of customers are currently paying interest on their credit card balance each month‡. For a financially under-served customer carrying the average interest-bearing balance, this could cost them an extra £714 in interest per year††. And for the typical £3,000* loan over 36 months, an under-served customer might pay an extra £2,499 in interest‡‡.

Meanwhile, those in worse situations might find them completely locked out, driving considerable growth in illegal and unregulated money lending. Research has shown that 3 million adults have turned to loan sharks, while 14 million adults are using BNPL. Analysing customer data, we found that under-served customers are 33% more likely to use BNPL, and they use it three times more often§§.

Not having access to regulated, legal, and mainstream credit can have long term implications, forcing people to spend a higher proportion of their income on interest and fees, and putting them under greater financial stress. The FCA found that more than two-fifths (43%) of adults have felt more anxious or stressed due to the rising cost of living, while one-fifth (20%) have suffered with their mental health¶.

Alastair Douglas, CEO of TotallyMoney comments:

“The continued growth in the number of people unable to access mainstream financial products is a real concern. Millions are being pushed into the arms of unregulated and illegal money lenders, which can come with considerably higher costs and little, or no protection.

“The system is broken, and the new government must work with the financial services and the regulator to create an industry which works for everyone. Only then can people be able to spend, save, and borrow in a way which is fair and transparent.

“Without support, the trend will only continue. The cost of living is now much higher than it was, and unemployment and economic activity are continuing to rise, while industry fails to keep pace with change. As the FCA stated last year, ‘A well-functioning credit market helps protect consumers, improve consumer outcomes and increase market efficiency. It is also ultimately good for the UK economy and its sustainable growth in the long term.’

“If you’re struggling to manage your money, then consider downloading a free personal finance app which lets you connect an account via open banking. It should give you insights into what’s holding you back, and provide you with a personalised plan to help you start moving forward.

“Some lenders will now use open banking data instead of checking your credit report — giving them improved insight into your finances, so they can match you with better, and more personalised options. You’ll often receive more pre-approved offers and at improved rates, so you can pay less interest, meaning your money can start growing.”

 

* TotallyMoney x PwC ‘Overlooked and financially under-served’: analysis of ~200,000 financially fragile customers in March 2022 vs May 2024
FCA: 7.4m heavily burdened
UK Finance March 2023 x UK Finance Feb 2024
§ Money and Pensions Service: 9m adults declined for credit
TotallyMoney: business and market insights
# FCA: 14 million have used BNPL at least once in the six months
Δ Fair4AllFinance: 3m used an unlicensed lender or loan shark
◊ ONS: Estimates of the population (total GB Adults: 51,718,632)
** PwC: Precious Plastic
†† TotallyMoney: cost of a poor credit score for cards
‡‡ TotallyMoney: cost of a poor credit score for loans
§§ TotallyMoney: open banking data analysis March 2024
¶¶ FCA: Financial Lives (wellbeing)

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