The FCA has put in place a package of support for people in difficulty to ensure help is available after October 31.

A survey of more than 7,000 people, conducted by the FCA during the coronavirus pandemic, found 12 million people in the UK had low financial resilience, meaning they may struggle with bills or loan repayments. The data shows 2 million of those who are not financially resilient have become so since February.

Industry figures show that 162,000 mortgage payment deferrals are currently in place, down from a peak of 1.8 million in June. A further 97,300 payment deferrals are in place on credit cards and 64,400 on personal loans.

Due to the impact of the pandemic, many of those who have experienced changes in employment and increased stress are now likely to have low financial resilience. These consumers are more likely to fall behind on payments. 36% of respondents who already had low financial resilience and had a mortgage said they are likely to fall behind on mortgage payments; 36% of those with loans or credit cards are worried about repayments on these; and 42% of renters are worried about falling behind on rent payments. 

Almost a third of adults (31%) have seen a decrease in income, with households seeing income fall by a quarter, on average. Those from a Black and Minority Ethnic (BAME) background were more likely to be affected, with 37% of BAME adults taking an income hit.

Whilst survey results show that BAME adults are more likely to have reduced working hours, those aged between 25-34 are the most likely, by far, to have had a change in employment as a result of the pandemic. This will affect the take up of debt advice with 19% of those aged 25-34 saying that they were more likely to seek debt advice in the next six months compared to 2% of those aged 55-64.

Sheldon Mills, interim executive director of strategy and competition, said: “We want to remind consumers, especially those who are newly in financial difficulty that lenders are able to provide you with support. There are options available to you which will reflect the uncertainties and challenges that many customers will face in the coming months. It is also important that households in serious financial difficulty seek debt advice for support.

“We understand that many people will continue to live in financial uncertainty as the impact of the coronavirus continues. Our surveys have shown that younger and BAME consumers have been impacted more than others, with a large amount of the population already having seen significant changes to their financial stability since the start of the pandemic.”

The guidance is designed to ensure that people can access tailored support which meets their individual needs, including taking account of local restrictions.

Support will be available both to those who have previously taken a payment deferral and those who are newly in financial difficulty, taking into account the specific needs of vulnerable consumers.

The FCA has said firms should work with customers to provide support before they miss payments. Given that people may be impacted in different ways, the regulator has urged that firms should be flexible and offer a full range of shorter and longer-term options which are tailored to reflect their customers individual circumstances. This could include:

• Suspending, reducing, waiving or cancelling any further interest or charges
• Permitting the customer to make no or reduced payments or
• Agreeing a repayment plan.

Tailored support is also available to overdraft customers who are struggling financially as a result of coronavirus. The FCA has said firms should also treat customers fairly – for example by not repossessing someone’s home when they are in lockdown and can’t access alternative accommodation.

For consumers who have previously taken a payment deferral, firms should offer a range of options for how the missed payments will be repaid.

Eric Leenders, managing director of personal finance, UK Finance, added: “The banking and finance industry is providing unprecedented levels of support to help customers through the COVID-19 crisis. We understand that many people’s finances will continue to be impacted by this pandemic and want to reassure them that ongoing help is available, tailored to their individual circumstances.

“It will always be in the best interest of customers to resume making payments on their mortgage, loan or credit card if they’re able to do so. However, anyone still experiencing financial difficulty should get in touch as early as possible to discuss the options available, starting by checking their lender’s website which will be updated with the latest information.”