Apartheid Britain: Half Unaffected By Covid, Rest Are Struggling

Some interesting news from the FCA today. Just under half of the UK population are doing OK during the pandemic, and 14% are actually financially better off. But the survey of 16,000 people revealed that 52% were struggling, with debt piling up, mortgage and rent unpaid and some using food banks. Never has Britain been more divided, as one half of the country screams at the other to lockdown, wear a mask and go bake some sourdough bread. Even though that half NEEDS to work to pay the bills, that’s the brutal reality.

Trouble is, this harsh financial apartheid, propped up by furlough cash and full public sector wages, will have long term social consequences. And they won’t be good. Insurers are going to see cancelled policies, more drivers using the roads without cover, attempted fraud and more. The wider impact will be an increasing resentment between the haves and have nots in Britain, especially in the private sector where people can see that the salaries, full sick pay and pensions offered in the public sector are simply not available to them – and never will be. Financial apartheid will end just as badly as other forms of apartheid.

Here’s the news from the FCA;

The Financial Conduct Authority (FCA) has released its latest Financial Lives survey (FLS), looking at consumers’ financial situations, the financial products they choose and their experiences of engaging with financial services firms. The FCA concluded its FLS research in February, and ran an extra survey in October in order to understand the impact of the Covid-19 pandemic on the financial situation of consumers.

According to the October survey, there are now 27.7 million adults in the UK with characteristics of vulnerability such as poor health, low financial resilience or recent negative life events. Having one of these characteristics means that these consumers are at greater risk of harm. This figure is up 15% since the FCA completed its FLS in February, when 24 million displayed characteristics of vulnerability.

Commenting on the findings, Nisha Arora, Director of Consumer and Retail Policy at the FCA said:

“The Financial Lives survey is fundamental to the work we do as a regulator, enabling us to hear directly from consumers across the UK.

“While there are some positives in the data, many of the findings are worrying. 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.

“Vulnerability remains a key focus for the FCA, and has been brought into sharp relief by the pandemic. We continue to work with the wider financial services sector, including businesses, regulators and government to support and protect consumers. We expect to finalise our guidance on how firms should treat vulnerable customers shortly.”

The FCA found that the number of consumers with low financial resilience – meaning over-indebtedness or with low levels of savings or low or erratic earnings – has grown. Over the course of 2020, the number of UK adults with low financial resilience increased from 10.7 million to 14.2 million.

Highlighting the threat to people’s incomes from the pandemic, in October one in three (30% or 15.9m) adults said they expect their household income to fall during the next six months, while 25% (13.2m) expected to struggle to make ends meet.

To cope with the hardships they expected to face, many adults reported that they were likely to cut back on essentials (33% or 17.5m) or to use a food bank (11% or 5.6m); 8.1 million (16%) expected to take on more debt. However, 48% of adults have not been affected financially by Covid-19, and 14% have actually seen an improvement in their financial situation.

Over the course of the pandemic, the FCA has worked with the financial sector and consumer bodies to help protect consumers with measures such as mortgage and credit payment deferrals. The report reveals the impact these measures have had with one in six (17% or 3.2m) mortgage holders having taken up a mortgage payment deferral and four in ten (40%) of them reporting they would have struggled a lot without such measures.

The Financial Lives survey provides insight into the financial lives of consumers, which the FCA and others use to understand the experiences of consumers, including those who are most vulnerable to harm and ensure that the right protections are in place. This is something which has been especially important as the economic toll of coronavirus (Covid-19) has continued to mount.

The FCA surveyed more than 16,000 people between August 2019 and February 2020. This was followed by a subsequent survey, with over 22,000 respondents, focused on the impact of the pandemic on consumers, conducted in October.

About alastair walker 6450 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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