The UK's financial watchdog has warned 12m adults are at risk of struggling financially as a result of the coronavirus crisis, with Black, Asian and Minority Ethnic and younger people most likely to be affected.
The Financial Conduct Authority rang the alarm bells ahead of October 31, which marks the deadline for support currently being offered to mortgage and overdraft customers in the form of payment holidays and deferrals.
Following a survey of 7,000 UK adults in July, the regulator said 2m of the 12m people it estimates as having low financial resilience had fallen into this category since February.
According to the research 31 per cent of adults had experienced a decrease in household income when surveyed, with BAME and young people more likely to be affected by the financial impact of the pandemic.
The data also found 36 per cent of respondents who already had low financial resilience and had a mortgage feared they were likely to fall behind on mortgage payments, with 42 per cent of renters worried they would fall behind on rent payments.
The FCA said it was aware the increasing number of coronavirus restrictions and local lockdowns coming into force throughout the UK in recent weeks could add further financial stresses for some people.
Sheldon Mills, interim executive director of strategy and competition at the FCA, said a large proportion of the population had already seen "significant changes" to their financial stability since the start of the pandemic.
Mr Mills 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."
Mr Mills added: “We understand that many people will continue to live in financial uncertainty as the impact of the coronavirus continues."
Three-month mortgage holidays for borrowers facing financial challenges amid the virus-driven economic downturn were first announced in March, but a further three-moth extension was granted until the end of October.
The ban on home repossessions also lifts at the end of this month.
But today the FCA said support would still be available to those who had previously taken a payment deferral or were newly in financial difficulty, with a particular focus on vulnerable customers.
The regulator said it expected lenders to work with customers to "provide support before they miss payments" and be flexible when offering both shorter and longer-term solutions.
Source: FCA
James Fearnley, corporate policy and propositions manager at the Money and Pensions Service, said it was "crucial" those struggling to make credit and mortgage repayments did not suffer in silence.
He said: "Particularly those who have been hit hardest by the financial impacts of Covid-19 such as young people and people from BAME backgrounds.
"From November 1, people will no longer be able to apply for support measures such as payment holidays or deferrals so it’s vital that anyone facing difficulties contacts their provider to find out what further help they can offer.
"It’s important to remember that you don’t have to agree to a repayment arrangement if you can’t afford it – your lender must agree what works best with you."
rachel.mortimer@ft.com
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