On 11 February 2021, the FCA published the results of its latest Financial Lives survey. The annual survey provides a wealth of information about consumers’ attitudes towards managing their money, the financial products they have and their experiences of engaging with financial services firms.

The executive summary is in two parts. In the first part, the FCA looks at how the market has evolved since its first Financial Lives survey in 2017 to early 2020. The FCA looks in particular at how many UK adults had low financial resilience or were otherwise not well positioned to deal with the financial impacts of the COVID-19 pandemic. In the second part, the FCA focuses on the impacts of COVID-19 on UK adults’ financial lives, drawing largely on its bespoke COVID-19 focused survey from October 2020.

In terms of the impact of the COVID-19 pandemic the headlines from the survey include:

  • COVID-19 has reversed the positive trend in vulnerability. There are now 27.7 million adults with characteristics of vulnerability – and so at greater risk of harm.
  • COVID-19 has had a profound impact on adults’ financial situations but has not affected the finances of all groups in society equally. Three in eight adults (38% or 20m) have seen their financial situation overall worsen because of COVID-19; 15% (7.7m) have seen it worsen a lot. Groups that have been particularly hard hit include: the self-employed, adults with a household income less than £15,000 per year, those aged 18-54, and BAME adults.
  • An additional 3.5 million adults now have low financial resilience. Nearly 16 million adults (30%) expect their household income to fall in the next six months, rising to under half (45%) of those who already have low financial resilience.
  • There is limited take-up of debt advice during the COVID-19 pandemic, so far, among those who need it most, but the service is valued by those who have used it.
  • Most people have not changed their opinion of financial service providers because of COVID-19. COVID-19 has had a small impact on consumers’ trust in financial services institutions. On balance, banks have seen a small improvement in being trusted: 17% of adults trust them more, while 15% trust them less. Consumers’ views of banks and mortgage lenders appear to have been shaped a great deal by their experiences of applying for mortgage payment deferrals, which, on balance have been positive.
  • COVID-19 has acted as a catalyst to speed up digital trends, but not all consumers have been able to cope without access to cash.