Coronavirus crisis widens inequality gap, reveals FCA

The survey carried out by the FCA exposed the financial divide in the UK caused by the coronavirus crisis, revealing that one in three households is experiencing income cuts, especially among certain social groups such as young adults, black, Asian and minority ethnic people.

Now, 12m adults struggle to pay their household bills, a figure which has gone up by 2m since the pandemic started in February.

The financial regulator said that many of those who have experienced changes in employment and increased stress are 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.

Households from black and minority ethnic (BAME) backgrounds are the worst affected by the coronavirus financially as 37% have taken an income hit. This ethnic group was also found to be more likely to be forced into reduced working hours.

Young adults aged 25 to 34 on the other hand have been hit differently as it is likely that they have had a change in employment or career direction as a result of the pandemic.

The FCA found that one in five young adults were now more likely to be seeking debt advice, compared with just one in 50 in the 55-64 age group.

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 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 FCA said it had put in place a package of support to ensure banks helped struggling borrowers after 31 October.