Financial Conduct Authority finds Covid-19 pandemic has left more than a quarter of UK adults with low financial resilience

Latest survey of consumers shows number of people with erratic earnings, over-indebtedness or low savings has increased by 3.5m over course of 2020

The Financial Conduct Authority’s (FCA) latest consumer research has found that the Covid-19 pandemic has left more than a quarter of UK adults with low financial resilience.

In Financial Lives 2020 survey: the impact of coronavirus, the FCA presents findings from a survey of more than 16,000 people carried out in February 2020 before the Covid-19 pandemic struck, and a follow-up survey in October 2020 with 22,000 respondents to test how Covid-19 had affected people’s financial position, vulnerabilities and expectations for the future.

Key findings include that -

• by October 2020, there were 27.7 million adults in the UK with characteristics of vulnerability - such as poor health, low financial resilience or recent negative life events - up by 15 per cent (3.7 million) from February 2020;
• both younger adults and Black, Asian and minority ethnic adults were disproportionately represented among the growing number of vulnerable consumers;
• over the course of 2020, the number of UK adults with low financial resilience - defined as over-indebtedness or with low levels of savings or low or erratic earnings – increased from 10.7 million to 14.2 million;
• in October 2020, one in three adults (30 per cent or 15.9 million) said they expected their household income to fall during the next six months, while 25 per cent (13.2 million) expected to struggle to make ends meet; and
• 33 per cent (17.5 million adults) reported that they were likely to cut back on essentials, 11 per cent (5.6 million people) reported they were likely to use a food bank and 16 per cent (8.1 million) said they expected to take on more debt.

The FCA highlights that the findings from both surveys will help it understand the experiences of consumers, particularly those who are most vulnerable to harm, a group it is continuing to focus on, for example by developing guidance on how they are treated by firms.

Commenting on the findings, Director of Consumer and Retail Policy at the FCA Nisha Arora said -

'The Financial Lives survey is fundamental to the work we do as a regulator, enabling us to hear directly from consumers across the UK.

While there are some positives in the data, many of the findings are worrying. Since the start of the pandemic, the number of people experiencing low financial resilience or negative life events has grown. The pain is not being shared equally with a higher than average proportion of younger and BAME adults becoming vulnerable since March. It is likely the picture will have got worse since we conducted the survey.’

For more information, see FCA finds the Covid-19 pandemic leaves over a quarter of UK adults with low financial resilience.