The City regulator has urged consumers struggling to make repayments due to the impact of Covid-19 to speak to their lenders about the options available to them.
The Financial Conduct Authority (FCA) has put in place a package of support for people in difficulty to ensure help is available after the current support package ends on 31 October.
The regulator said that many people are experiencing changes in employment which is affecting their ability to repay loans.
It conducted a survey of more than 7,000 people during the pandemic, which found 12 million people in the UK had low financial resilience, meaning they may struggle with bills or loan repayments.
The poll also showed that almost a third of adults (31 per cent) have seen a drop in income, with households witnessing income fall by a quarter, on average. Those from a black and minority ethnic background (BAME) were more likely to be affected, with 37 per cent of BAME adults taking an income hit.
The regulator said that firms should be flexible with consumers in financial difficulty and offer a full range of shorter and longer-term options.
These could include: suspending, reducing, waiving or cancelling any further interest or charges, permitting the customer to make no or reduced payments or agreeing a repayment plan.
The FCA said for consumers who have previously taken a payment deferral, firms should offer a range of options for how the missed payments will be repaid.
“We want to remind consumers, especially those who are newly in financial difficulty that lenders are able to provide you with support,” said Sheldon Mills, interim executive director of strategy and competition at the FCA.
“There are options available to you which will reflect the uncertainties and challenges that many customers will face in the coming months.
“It is also important that households in serious financial difficulty seek debt advice for support.
“We understand that many people will continue to live in financial uncertainty as the impact of the coronavirus continues.
“Our surveys have shown that younger and BAME consumers have been impacted more than others, with a large amount of the population already having seen significant changes to their financial stability since the start of the pandemic.”
Last month, the FCA said that lenders must support struggling borrowers even after payment deferrals and work with them to offer flexible and sustainable repayment arrangements.