The survey looks at consumers’ financial situations, the financial products they choose and their experiences of engaging with financial services firms.

The FCA concluded its FLS research in February, and ran an extra survey in October in order to understand the impact of the COVID-19 pandemic on the financial situation of consumers.

Having one of these characteristics means that these consumers are at greater risk of harm. This figure is up 15% since the FCA completed its FLS in February, when 24 million displayed characteristics of vulnerability.

Nisha Arora, director of consumer and retail policy at the FCA, said: “The Financial Lives survey is fundamental to the work we do as a regulator, enabling us to hear directly from consumers across the UK.

“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.”

The FCA found that the number of consumers with low financial resilience – meaning over-indebtedness or with low levels of savings or low or erratic earnings – has grown. Over the course of 2020, the number of UK adults with low financial resilience increased from 10.7 million to 14.2 million.

Highlighting the threat to people’s incomes from the pandemic, in October one in three (30% or 15.9m) adults said they expect their household income to fall during the next six months, while 25% (13.2m) expected to struggle to make ends meet.

To cope with the hardships they expected to face, many adults reported that they were likely to cut back on essentials (33% or 17.5m) or to use a food bank (11% or 5.6m); 8.1 million (16%) expected to take on more debt. However, 48% of adults have not been affected financially by Covid-19, and 14% have actually seen an improvement in their financial situation.

Over the course of the pandemic, the FCA has worked with the financial sector and consumer bodies to help protect consumers with measures such as mortgage and credit payment deferrals.

The report reveals the impact these measures have had with one in six (17% or 3.2m) mortgage holders having taken up a mortgage payment deferral and four in ten (40%) of them reporting they would have struggled a lot without such measures.