The FCA’s new Financial Lives survey exposes the fragile state of our finances, both prior to the pandemic and now. In February last year, 20% of UK adults had low financial resilience – meaning they were over-indebted or had little capacity to withstand financial shocks. This has now increased to over a quarter (27%).
The survey found that one in ten UK adults had a high cost loan in February 2020 or the 12 months prior. These adults tended to be struggling financially, 41% were over-indebted, and three in ten had fallen behind or missed payments for domestic bills or credit commitments.
We urgently need to rebuild and bolster the nation’s resilience so we can better withstand financial shocks, and ensure existing inequalities in our society are reduced. Increasing access to affordable loans through CDFIs and credit unions is a critical part of providing individuals with the tools they need to maintain, repair and insulate their finances. Following the promising recommendations in the FCA’s Woolard review earlier this year, we look forward to working together with more banks, housing associations and other partners to change the trajectory on personal finances for the better.