The coronavirus pandemic propelled the number of vulnerable adults in the UK to almost 28m last year prompting warnings of growing financial inequality among the population.
A survey of tens of thousands of adults conducted by the Financial Conduct Authority found the crisis had "reversed the positive trend in vulnerability" amid widespread redundancy, reduced working hours and low financial resilience.
Between March and October last year the the number of adults with characteristics of vulnerability increased by 3.7m to 27.7m, a 15 per cent increase on the number identified in February 2020 before the first wave of the pandemic hit the UK.
The FCA surveyed more than 16,000 people between August 2019 and February 2020 and a further 22,000 people in October in a bid to analyse the impact of the pandemic on consumers.
Nisha Arora, director of consumer and retail policy at the FCA, said whilst the data had shown some positives, many of the findings were worrying.
She said: "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."
Arora warned vulnerability had been "brought into sharp relief by the pandemic".
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The regulator's work also found the number of adults with low financial resilience had grown throughout 2020, increasing from 10.7m to 14.2m.
Low financial resilience can include factors such as over-indebtedness, low levels of savings or low or erratic earnings.
In October one in three adults predicted their household income to fall during the next six months, while 25 per cent expected to struggle to make ends meet.
It meant many adults reported they were likely to cut back on essentials, use a food bank or take on more debt.
The figures have prompted concerns the pandemic has compounded financial inequality in the UK, with BAME adults, those aged between 18-54 and the self-employed hit particularly hard.
Rachael Griffin, tax and financial planning expert at Quilter, said it was a "disturbing fact" that more than half of the UK’s adult population were in some sense vulnerable.
She said: "This year has been an extreme set of circumstances, but it is still hard to stomach such a significant increase in this population.
"The devastating situation of being in a financially precarious position is not shared equally across the population either — younger and BAME populations are more likely to have become vulnerable this year.
Griffin warned the fact the nation was in such a situation was "a crisis in itself".
She added: "The FCA has indicated the importance of looking at vulnerability — vulnerability policy for financial services companies is vital, particularly now."
Amid today's figures the FCA said its long-awaited final guidance on vulnerable consumers was expected "shortly".
rachel.mortimer@ft.com
