LONDON (Reuters) – Some 12 million people in Britain are likely to struggle with bill and loan repayments as the COVID-19 pandemic continues to wreak economic havoc, an investigation by the Financial Conduct Authority on the financial resilience of consumers.
The survey, conducted in July, found that 12 million people in Britain had low financial resilience and also found that a sixth of those people had become financially vulnerable since February, after closures to control the virus reduced incomes and led to thousands of job cuts.
The survey, in which 7,000 people participated, showed that nearly a third of adults experienced a drop in income, while household income fell by a quarter on average.
Black and ethnic minority respondents fare even worse, with 37% saying their income has been affected.
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 feared taking behind on their obligations.
36% of people fear falling behind on loan or credit card repayments.
“We want to remind consumers, especially those who have recently experienced financial difficulties, that lenders are able to support you,” said Sheldon Mills, interim executive director of strategy and competition for the FCA.
The regulator has put in place a package of measures to ensure that vulnerable households can access aid after October 31, when previous COVID-19 aid initiatives such as loan and mortgage repayment interruptions and the original job retention program expire.
He also encouraged borrowers to seek free advice on how to handle problematic debt and urged banks and lenders to treat customers fairly, adding that businesses should work with customers to provide assistance before they do. do not miss payments.
Options to negotiate new repayment plans, suspend, reduce, waive or cancel any other interest or charges will be open to clients, the FCA said.
However, banks needed to be transparent about how such actions might lead to increased costs in the long run and the impact of such support on personal credit profiles.
Reporting by Sinead Cruise. Editing by Jane Merriman