Some 12 million people in Britain are likely to struggle with bills and loan repayments as the COVID-19 pandemic continues to wreak economic havoc, a Financial Conduct Authority survey tracking consumer financial resilience showed on Thursday.
The survey, conducted in July, found 12 million people in Britain had low financial resilience and also found that one-sixth of those people had become financially vulnerable since February, after lockdowns to control the virus slashed incomes and led to thousands of job cuts.
The survey, in which 7,000 people took part, showed that almost a third of adults have suffered a drop in income, while income for households has fallen by a quarter on average.
Black and Minority Ethnic respondents fared even worse, with 37% reporting a hit to their incomes.
More than a third of respondents, who already had low financial resilience and had a mortgage, said they were likely to fall behind on mortgage payments, while 42% of renters said they were worried about falling behind on their obligations.
36% of people feared falling behind on repayments linked to loans or credit cards.
“We want to remind consumers, especially those who are newly in financial difficulty that lenders are able to provide you with support,” Sheldon Mills, the FCA’s Interim Executive Director of Strategy and Competition said.
The regulator has put together a package of measures to ensure vulnerable households can access help after Oct. 31, when earlier COVID-19 relief initiatives such as loan and mortgage repayment breaks and the original Job Retention Scheme expire.
It has also encouraged borrowers to seek free advice on how to manage problem debts and urged banks and lenders to treat customers fairly, adding that firms should work with customers to provide support before they miss payments.
Options to negotiate new repayment plans, suspend, reduce, waive or cancel any further interest or charges will be open to customers, the FCA said.
However, banks needed to be transparent about how such actions could result in increased costs over the long term and how such support could impact personal credit profiles.