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12 million people in Britain will struggle to pay bills, watchdog says

Thu, 22nd Oct 2020 00:00

LONDON, Oct 22 (Reuters) - Some 12 million people in Britain
are likely to struggle with bills and loan repayments as the
COVID-19 pandemic continues to wreak economic havoc, a Financial
Conduct Authority survey tracking consumer financial resilience
showed on Thursday.

The survey, conducted in July, found 12 million people in
Britain had low financial resilience and also found that
one-sixth of those people had become financially vulnerable
since February, after lockdowns to control the virus slashed
incomes and led to thousands of job cuts.

The survey, in which 7,000 people took part, showed that
almost a third of adults have suffered a drop in income, while
income for households has fallen by a quarter on average.

Black and Minority Ethnic respondents fared even worse, with
37% reporting a hit to their incomes.

More than a third of respondents, who already had low
financial resilience and had a mortgage, said they were likely
to fall behind on mortgage payments, while 42% of renters said
they were worried about falling behind on their obligations.

36% of people feared falling behind on repayments linked to
loans or credit cards.

"We want to remind consumers, especially those who are newly
in financial difficulty that lenders are able to provide you
with support," Sheldon Mills, the FCA's Interim Executive
Director of Strategy and Competition said.

The regulator has put together a package of measures to
ensure vulnerable households can access help after Oct. 31, when
earlier COVID-19 relief initiatives such as loan and mortgage
repayment breaks and the original Job Retention Scheme expire.

It has also encouraged borrowers to seek free advice on how
to manage problem debts and urged banks and lenders to treat
customers fairly, adding that firms should work with customers
to provide support before they miss payments.

Options to negotiate new repayment plans, suspend, reduce,
waive or cancel any further interest or charges will be open to
customers, the FCA said.

However, banks needed to be transparent about how such
actions could result in increased costs over the long term and
how such support could impact personal credit profiles.

(Reporting By Sinead Cruise. Editing by Jane Merriman)

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