The UK financial regulator is urging borrowers affected by coronavirus lockdowns to seek support from their banks, as its figures show 12 million Britons are likely to struggle with bills or loan repayments.
A survey by the Financial Conduct Authority (FCA) found that 12 million people in the UK had low financial resilience, and that two million of those people had become financially vulnerable since February, after lockdowns to limit the spread of the virus slashed incomes and led to thousands of job cuts.
British borrowers struggling under months of Covid-19 restrictions should still have access to financial help when support measures including interest-free overdrafts and payment freezes end Oct. 31, the UK watchdog said.
We want to remind consumers, especially those who are newly in financial difficulty, that lenders are able to provide you with support"
The poll of 7,000 people by the FCA in July found 31% of UK adults have suffered a decrease in income during the pandemic, and that percentage is higher for young and non-white people. About 37% of Black and ethnic minority Britons reported a hit to their income, according to the survey.
"‘We want to remind consumers, especially those who are newly in financial difficulty, that lenders are able to provide you with support," said Sheldon Mills, the FCA's interim director of strategy and competition.
"There are options available to you which will reflect the uncertainties and challenges that many customers will face in the coming months," he added. "It is also important that households in serious financial difficulty seek debt advice for support."
Over a third of respondents who already had low financial resilience and a mortgage, said they were likely to fall behind on mortgage payments, while 42% of renters said they were worried about falling behind on rent payments.
Thursday's message from the FCA follows a nationwide study that found 31% of adults had experienced a drop in household income during the Covid-19 pandemic, with under 35s and black, Asian and minority ethnic (Bame) people the most likely to be affected.
Bank lobby group UK Finance said the industry is committed to providing support to customers facing financial difficulty. It noted in a statement that 4.4 million payment deferrals on mortgages, credit cards and personal loans were granted since the start of the pandemic, with 323,700 of those still in place.