There are now 27.7 million adults in the UK who have shown signs of vulnerability, such as low financial resilience, poor health or suffering recent negative life events, due to the impact of COVID.
The Financial Lives survey, commissioned by the Financial Conduct Authority (FCA), looked at the financial situation of 16,000 consumers between August 2019 and February 2020. They also spoke to an additional 22,000 people in October 2020 to understand the impact of the pandemic.
The FCA found that the number of consumers with low financial resilience, low levels of savings or are on low or erratic pay – has increased. Over the course of 2020, the number of UK adults with low financial resilience increased from 10.7 million to 14.2 million.
Having one of these characteristics means that these vulnerable consumers are at greater risk of harm, especially if a financial services firm does not act with ‘appropriate levels of care’.
Struggling to make ends meet
In October 2020, 30% of adults polled said they expected their household income to fall during the next six months, while 25% expected to struggle to make ends meet.
To cope with the hardships they predicted, a third of adults said they were likely to cut back on essentials, while 16% expected to take on more debt. One in 10 (11%) said they planned to use a food bank.
“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,” said Nisha Arora, director of consumer and retail policy at the FCA.
What to do if you’re struggling with debt
Depending on your situation, there is help available to cope with rising debt including debt management plans, debt consolidation products, and payment holidays. Always seek financial advice when deciding what's best for you and your circumstances.
For free, impartial, advice on the support available to help with your individual circumstances, contact charities such as StepChange.
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