The Covid-19 pandemic has left over a quarter of UK adults financially vulnerable with too much debt or low levels of savings, a survey by watchdog the Financial Conduct Authority (FCA) has found.
Nearly 28 million adults in the UK were showing characteristics of vulnerability such as poor health, low financial resilience or negative life events by October last year. Having any one of these characteristics means that these consumers are at greater risk of harm, the FCA said.
This figure was up 15% from February 2020, before the first lockdown kicked in and businesses closed.
The FCA also found that the number of consumers with low financial resilience, such as over-indebtedness or with low levels of savings or low or erratic earnings, has grown.
Over the course of last year, the number of UK adults with low financial resilience increased from 10.7 million to 14.2 million, the report shows, while different demographics are being affected more than others.
Highlighting the threat to people’s incomes from the pandemic, in October one in three adults said they expect their household income to fall during the next six months, while 25% expected to struggle to make ends meet.
Over 30% of UK adults are having to cut back on essentials, while 11% report that they use food banks in order to get by.
However, nearly half of the adult population has not been affected financially by Covid-19, while 14% have seen an improvement in their financial situation, according to the survey.
Nisha Arora, director of consumer and retail policy at the FCA, said that although there are some positives in the data, many of the findings are worrying.
“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,” she said.
The FCA surveyed more than 16,000 people between August 2019 and February 2020. This was followed by a subsequent survey, with over 22,000 respondents, focused on the impact of the pandemic on consumers, conducted in October.
A separate report published earlier this week also found that individual investors have reduced spending and increased their investments during the Covid-19 pandemic.
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