In the survey of over 100 Independent Financial Advisers, 70% said their clients had taken this action. Furthermore, 60% of respondents to the survey said they had seen an increase in the number of clients in financial difficulty in the past year.
The EuroDebt survey reveals a stark picture of the impact increased living costs, stagnant wage inflation and a contracting job market is having on family finances.
Gerry Mansfield, Head of Business Development of DEMSA member EuroDebt said:
“These are sobering statistics and sadly things aren’t going to get any easier anytime soon. Our experience through the recession has been that more and more financial intermediaries have discovered clients in financial difficulty when they have received a claw back on commission from insurance cover that has been dropped.
“Whilst it seems sensible to cut back on non-essential items when money is tight, short term fixes such as cancelling non-essential insurance covers can leave consumers much more vulnerable and may prove to be a false economy. We’re not just talking about cover for the washing machine, boiler or for vet’s bills, all of which could prove eye wateringly expensive, income protection for example can prove vital if you were to lose your job or become unable to work through no fault of your own. The survey confirmed that loss of income was the primary (46.5%) reason for getting into financial difficulty, which mirrors EuroDebt’s own experience for clients seeking debt advice.
“We advise even those clients in serious financial difficulty and entering a Debt Management Plan (DMP) or alternate debt solution, to be very selective about the insurance covers they plan to cancel, as coping without the cover if things do go wrong could make their situation much more difficult to manage. The best way to tackle financial difficulties is to take a long hard look at the total financial picture rather than just the monthly shortfall. The majority of the respondents to the survey were sole traders and our experience is that compliance can be a major burden on small businesses.”
