COVID-19 has left more than 27 million adults across the UK with characteristics of vulnerability such as poor health, low financial resilience or recent negative life events – family disputes, death or accidents – according to a new survey.
The financial impact has split the population into two halves, with some people’s incomes devastated and others left entirely unaffected, research from the City watchdog showed.
Younger people and black, Asian and minority ethnic (BAME) adults are often bearing an unequal share of the “pain”, said the Financial Conduct Authority (FCA).
While millions are using food banks or trying to bridge gaps in their income, 48% of adults said they have not been affected financially by Covid-19, and one in seven (14%) has actually seen an improvement in their finances.
The FCA estimated that around 14m people have low financial resilience – meaning they are over-indebted, have low levels of savings or low or erratic earnings. Over the course of last year, the number of adults with low financial resilience increased from 10.7m to 14.2m.
According to its Financial Lives survey in October, around 27.7m people have one or more of the traits – a rise of 15% since previous research in February, which put the total at 24m. The FCA said displaying just one of the characteristics meant these consumers were at greater risk of harm.
Nisha Arora, the FCA director of consumer and retail policy, said: “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. Vulnerability remains a key focus for the FCA and has been brought into sharp relief by the pandemic.
“We continue to work with the wider financial services sector, including businesses, regulators and government to support and protect consumers.
“We expect to finalise our guidance on how firms should treat vulnerable customers shortly.”
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