StepChange reacts to FCA’s Financial Lives Survey findings

Today, the Financial Conduct Authority has released the results from its latest Financial Lives Survey showing that the ongoing Covid-19 pandemic has left a quarter of UK adults with low financial resilience, meaning they are over-indebted or have low levels of savings or low or erratic earnings. Each of these is a risk factor that increases the chance of an individual falling into problem debt.

Reacting to the findings, Richard Lane, Director of External Affairs at StepChange said: “It is deeply concerning that levels of financial vulnerability are so high at a time when the pandemic is having such a devastating impact on people’s lives. Our own research has found 15m people have taken some form of financial hit since March, with nearly half falling behind on essentials or borrowing to make ends meet. With the end to measures such as the rental eviction ban, payment holidays and furlough on the horizon, it’s likely that vulnerability to debt, hardship and destitution will only rise without decisive intervention.

“The FCA’s recent Woolard review has rightly highlighted the need for more support for those turning to high-cost credit after income shocks, but more can be done to protect this group of financially vulnerable people. Meanwhile, the Government must urgently set out how those affected by the pandemic – and particularly those in financially vulnerable positions – will be supported in the long term. Keeping the £20 uplift to Universal Credit would go some way to achieving this, the Government should also look to provide targeted funding that can enable households to exit safely from unmanageable coronavirus debt. By concentrating support in this way, it can reduce the rising financial vulnerability and avert the damaging impact of long-term debt on health, mental health and the economy.”