Financial Lives 2020 survey: the impact of coronavirus

Financial Lives Published: 11/02/2021 Last updated: 26/07/2023

Key findings from the FCA’s Financial Lives 2020 survey and October 2020 Covid-19 panel survey.


Financial Lives, our flagship survey of UK consumers, 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. It is unique in the combination of its design, its breadth (over 1,300 questions covering all the retail sectors that we regulate) and its size (over 16,000 respondents in the latest wave). As a tracking survey, it provides evidence of how things are improving, worsening or staying the same, from the point of view of the consumer.

As a consumer-focused and data-led regulator, it is vital that we have the insights to understand the realities of consumers’ changing financial lives. The Financial Lives nationally representative data help us to deliver our consumer protection and competition objectives through identifying harm and improving consumer outcomes. The data also provide valuable insights for the financial services industry, the Government, policy-makers, consumer bodies and academics.

Our second Financial Lives survey ended in February 2020 before the pandemic. It therefore gives us an understanding of consumers’ financial positions before the coronavirus (Covid-19) pandemic. This tells us much about their likely ability in February 2020 to deal with financial shocks. It also means that the survey acts as a baseline against which to understand changes in people’s financial situations during and after the pandemic. 

To test how the pandemic had already affected UK consumers, we ran a survey – our Covid-19 panel survey – in October 2020 with over 22,000 respondents. We will use future research and analysis – including our next Financial Lives survey – to understand the changing shape of consumers’ financial lives after the pandemic.

This executive summary is in two parts. In the first part, we look at how the market has evolved since our first Financial Lives survey in 2017 to early 2020. We look 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 pandemic. In the second part, we focus on the impacts of Covid-19 on UK adults’ financial lives, drawing largely on our bespoke Covid-19 focused survey from October 2020.

See Chapter 1 (Introduction to the Financial Lives survey) for more information on the research used in this report.

The impacts and experience of Covid-19

Consumers with characteristics of vulnerability

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


Between March and October 2020, the number of adults with characteristics of vulnerability increased by 3.7 million to 27.7 million. A 15% increase on the February figure, this takes the overall proportion to 53% of all adults. This increase has been driven mostly by more people experiencing negative life events, particularly redundancy or reduced working hours (up 45%, from 20% of adults in February to 29% in October) and having low financial resilience (up 35%, from 20% of adults in February to 27% in October).

Those experiencing a negative life event in the preceding 12 months increased from 10.5 million (20%) in February to 15.3 million (29%) in October. In this period, ie from the end of February to October, over a quarter (27%) of all employees were furloughed for any length of time. This includes 4% who were put on paid leave, but not under the Coronavirus Job Retention Scheme. One in six (17%) employees reported that their employer had cut their hours, while less than one in ten (7%) had their hours increased or worked overtime. Seven in ten (71%) self-employed businesses experienced a reduction in business revenues between March and October. One in ten (9%) ceased trading altogether.

Covid-19 has had a disproportionate impact on those of working age. The largest proportional increases in vulnerability since February 2020 – by more than 40% –have been among younger adults aged 18-34 and the self-employed. In contrast, retirees have seen a small proportionate decrease in the numbers who have characteristics of vulnerability.

Our results are not showing a significant overall increase in the proportion of people saying they have a health condition or illness that reduces their ability a lot to carry out day-to-day activities (although this could have changed since October 2020, when the research was conducted). Covid-19 appears, however, to be having a significant impact on mental health, which can result in a range of difficulties when dealing with financial services. In October 2020, 18% told us they had a mental health condition or illness, up from 12% in February 2020. Over two-fifths (43%) of these were aged 18-34.

Our Covid-19 panel survey asks about emotional resilience. One in fourteen (7%) of all UK adults said they find it very difficult to recover from negative experiences. In total, 1% have low emotional resilience but no other characteristics of vulnerability. Including the emotionally vulnerable would increase the proportion of people with characteristics of vulnerability from 53% to 54% in October 2020.

Impact on finances and financial resilience

Covid-19 has had a profound impact on adults’ financial situations but has not affected the finances of all groups in society equally


Data table


Base: All UK adults (Oct 2020:22,267), excluding ‘don’t know’ responses (3%)

Question: F16 (Rebased). Thinking about your financial situation overall, to what extent have you been impacted by the Covid-19 pandemic to date?

Note: This question uses a seven-point scale. Two codes have been condensed to ‘a lot worse’ and another two codes to ‘a lot better’.

Three in eight adults (38% or 20.0m) 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.

While these numbers are of course concerning, our results also show that almost half of adults (48% or 24.9m) have not been impacted financially by Covid-19, while one in seven (14% or 7.5m) have seen an improvement in their financial situation overall.

Comparatively, the retired population has been better insulated from the financial impacts of Covid-19. This is perhaps not surprising as key sources of income for this group – the State pension and defined benefit pensions - have not changed.

We've maxed out on credit cards. We've maxed out on the bank loan... We've got a £13,000 overdraft, and the bank put the interest rates up to 39%! So, it is really, really tough.
Female, 55-64
I think, at the end of the month when all the bills are paid, I end up with about £75 disposable income, which, compared to what I'm used to, is absolutely crazy.
Male, 25-34

Covid-19 impact on financial resilience

Given the severity of the lockdown restrictions, limitations on consumer activities, and the resulting impact on the UK’s labour market, it is perhaps not surprising to see that there have been both positive and negative financial impacts of Covid-19.  These are summarised in Figure ES.3.

Figure ES.3: Adults who say their unsecured debt, cash savings, household income and household spending has increased or decreased since February (Oct 2020)

Source: Covid-19 panel survey, Oct 2020

Base: All UK adults (October 2020:22,267), excluding ‘don’t know’ responses (2%/ 1%/ 1%/ 1%)

Question: F1 (Rebased)/ F4 (Rebased)/ F7 (Rebased)/ F10 (Rebased). Comparing your … now and at the end of February. Overall, has your … increased, decreased or stayed the same?

Note: The base for ‘cash savings’ is those with any cash savings at the end of February

Positive impacts include 37% of adults reporting an overall decrease in their household spending, 12% experiencing an increase in household income, and 19% reducing their unsecured debt.

My opportunities to spend have been reduced, which is the main reason for my financial situation being better at this stage. I have put aside some money, paid off outstanding car loans, and have made some improvements around the house.
Male, 25-34
An additional 3.5 million adults now have low financial resilience


Between March and October 2020, the number of people with low financial resilience increased by 3.5 million from 10.7 million to 14.2 million. Those with low financial resilience now account for a quarter (27%) of adults.

This is not surprising given the large number of adults who, before Covid-19, had limited savings or had patterns of borrowing that placed them at greater risk if they experienced a persistent drop in income.

Looking at the groups which have been most affected since February 2020, the largest proportional increases in low financial resilience – by 40% or more – have been among those aged 18-54, and particularly younger adults aged 18-34. Adults in employment in February (employees and the self-employed) have been affected more than those who were then unemployed or retired.

We asked adults in October 2020 about their expectations for the next six months. This was before the announcement of the second England-wide lockdown that began in early November 2020 and the extension of the furlough scheme and payment deferrals. Some local lockdowns were in force, however, during October.

Two and a half million adults (9% of all adults working for an employer in October) have been informed that their job is at risk. A further 28% say they may be made redundant, but had not been informed that their job is at risk.

The prospects also look gloomy for almost half of those in self-employment. Although just 4% expect to cease trading in the next six months, 16% expect their revenues to decrease a lot, and 26% expect their revenues to decrease a bit.

Given this fairly bleak outlook, it is not surprising, that 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.

As Figure ES.4 shows, almost two-fifths (38% or 19.6m) of adults anticipate either struggling to make ends meet, seeing their debt levels increase, not being able to pay domestic bills, or not being able to keep up with their mortgage, rent or credit and loan commitments over the next six months. This figure increases to 72% among those with low financial resilience in October 2020.


Data table


Base: All UK adults (Oct 2020:22,267)

Question: FU5/6/7sum. How confident are you that you will be able to meet your mortgage payments/ rent payments/ credit and loan repayments over the next 6 months? FU8a,c. Thinking about the next 6 months, how likely is it that you will face any of the following challenges?

When asked to think about the challenges they are likely to face in the next six months, many are very worried about their financial prospects:

  • 26.5 million (51%) expect to cut back on or delay non-essential spending
  • 17.5 million (33%) are likely to cut back on essentials
  • 8.1 million (16%) expect to take out a new credit product or borrow more on an existing one
  • 5.6 million (11%) say they are likely to use a food bank

How those affected by Covid-19 are having to rein back their spending

Payment deferrals

Without mortgage and credit payment deferrals, many would have found it even more difficult to cope


Between March and October 2020, one in six (17%) mortgage holders (3.2m) told us they took up a mortgage payment deferral. Another 14% (2.6m) of mortgage holders were considering doing so in October. Of those who took a deferral, four in ten (40%) told us they would have struggled a lot without it. Awareness of the scheme was high, with just 6% of all mortgage holders saying they might have taken a deferral, had they been aware of it.

Adults most likely to take a mortgage payment deferral (Oct 2020)

Adults who were over-indebted in February


Employees who were laid off or made redundant because of Covid-19


Employees who became a full-time carer or reduced their hours to care for children/ others because of Covid-19


Employees who had their hours or pay cut because of Covid-19


Adults employed on a fixed-term, temporary, zero hours, or agency staff contract in February


Employees who were furloughed or put on paid leave because of Covid-19


Black, Asian and minority ethnic (BAME) adults


18-34 year olds


The priority was getting us through those first few months. We were worried about things like interest rates and so on as well, but it [the payment deferral] was the only way really that we could continue to manage.
Female, 35-44

A fifth (19%) of adults with any credit or loan product (excluding overdrafts) told us they took a credit deferral, rising to half (49%) of those holding high-cost short-term credit such as payday loans or short-term instalment credit. Of those who took out a credit deferral, 63% took out a deferral on more than one loan. For many this support was a welcome lifeline: 32% said they would have struggled a lot more, if credit deferrals were not available.

Two-thirds (67%) of those who took up a mortgage payment deferral felt their lender was sympathetic to their circumstances. Two-fifths (41%) report their lender had contacted them to discuss their options, for example extending their deferral or extending their mortgage term to reduce future payments. The comparative statistics for those who took credit payment deferrals are 51% and 50%, respectively.

Debt advice

There is limited take-up of debt advice during the pandemic, so far, among those who need it most, but the service is valued by those who have used it


A total of 1.7 million people accessed debt advice between March and October 2020. Far more may need debt advice: potentially up to the 8.5 million over-indebted in October 2020. This means that 6.8 million people who might benefit from debt advice were not receiving it. Over-indebted adults tell us that the biggest barriers to accessing such services are embarrassment discussing their debts or not wanting to face dealing with the problem (35% gave this reason for not using debt advice) and lack of awareness that free services exist or whom to contact (31%).

Debt advice, however, can make a difference to those who are struggling. Around two in three (64%) debt advice users felt that their needs were understood by the adviser. For a similar proportion (62%) their debts are more manageable having spoken to an adviser.

Looking forwards, 13% of all adults (6.7m) feel that it is likely they will need debt advice in the next six months. Almost half, would like to access this advice online.

Trust in financial services

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.

Trust in insurance companies has suffered a net decline: 22% of adults trust insurance companies less because of Covid-19, while 11% trust them more. Over one in three (36%) believe that the insurance and protection industry did not do enough to help consumers in their response to Covid-19.  
Consumers’ views are affected by their experiences. One in four (25%) have experienced at least one service-related problem with any financial services provider – including a problem getting through to them (11%) and issues using providers’ websites (9%).

Perceptions matter too. One in three (34%) adults believe that insurance companies rarely pay out, up from around one in five (22%) in February 2020. Just 4% of all adults, however, have not been able to get a refund from an insurance company or a claim has been handled poorly between March and October 2020. Of these, 21% say they trust insurance companies a little less now, and a further 14% say they trust them a lot less.

Fraud and scams

Unsolicited approaches have increased during the pandemic, increasing the risk of fraud and scams


In the 12 months to February 2020, 18% of adults (9.3m) received at least one unsolicited approach involving investments, pensions and retirement planning – that might be a scam. Over a fifth (22%) say they definitely received more unsolicited approaches since the end of February than they did before Covid-19; a further 22% think this may be the case.

We asked about potential scams since the end of February related to Covid-19, such as phishing scams designed to look like they are from the Government offering Covid-19 financial support, from the NHS Test and Trace service, or from TV Licensing offering six months of free TV licence because of the pandemic. Over one-third (36%) of adults say that they have received at least one such approach.

A total of 1.4 million adults say they paid out money as a result of a Covid-19 possible scam. People with characteristics of vulnerability are more susceptible to these approaches: 12% paid out money, compared with just 1% of those with no such characteristics. Younger adults are also more susceptible: 16% of 18-24 year olds paid out money, compared with 1% of those aged 55+.

Access to cash

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


During Covid-19, most adults have coped well with reduced access to bank branches and ATMs and with fewer businesses accepting cash. For example:

  • Around three in ten (28%) say they used online or mobile banking more regularly compared with the end of February. A further 2% say they used it for the first time since the first national lockdown began. In contrast, 46% say they visited bank or building society branches less frequently compared with the end of February.
  • Around three in four (72%) who were heavily reliant on cash in February coped with reduced access to bank branches and ATMs; 73% coped with fewer businesses were accepting cash. One in seven (15%) and one in six (16%), respectively, have not coped, however. 
  • Over half (55%) made contactless payments more frequently in October compared with the end of February. This pattern is much the same for those who were heavily reliant on cash in February.
  • One in three (34%) have provided help to a digitally excluded friend, neighbour or relative during the pandemic, to use the internet (21%), make payments online (18%), or set up online or mobile banking (11%).

Switching and shopping around

Covid-19 has also led to more people shopping around and switching


Covid-19 has increased consumer interest in shopping around for financial products. We have also seen more switching in insurance and more attention being paid to policy details, but did not capture data on this for other retail sectors. For example:

  • One in three (33%) adults with insurance products are more likely to shop around in the future. For those who had never shopped around for these products previously, 10% say they are now more likely to do so. 
  • Three in ten (29%) adults with other financial products like current accounts, savings accounts and ISAs are more likely to shop around in the future. For those who had never shopped around for these products previously, 13% say they are now more likely to do so.
  • One in six (17%) adults with insurance or protection products have switched to a new provider to lower the cost of a policy. This proportion increases to 24% for adults who were employed in February but lost their job due to Covid-19.
  • One in eight (12%) adults with insurance or protection products have reviewed a policy to see what it covers; 9% have renewed a policy with changes to its terms and conditions (such as opting for higher excesses or less cover), and 8% have switched to a provider offering more appropriate cover for their needs.

Read the full Financial Lives 2020 report (PDF)