As many as 4,000 financial firms could go bust due to COVID-19, FCA says

A survey by the regulator also indicated that 59% of 23,000 firms surveyed said they expected the pandemic to have a negative impact on their net income

City of London

The UK’s Financial Conduct Authority (FCA) has warned that up to 4,000 financial services firms are at “heightened risk of failure” as a result of the market downturn caused by the coronavirus (COVID-19) pandemic.

On Thursday, the regulator reported data from its COVID-19 financial resilience surveys, which were sent to 23,000 firms to understand the effect of the pandemic on their financial viability.

The FCA’s executive director of consumers and competition, Sheldon Mills, said small and medium-sized firms made up a large portion of those at risk, with 30% of these having the potential to “cause harm in failure”.

 "Our role isn't to prevent firms failing. But where they do, we work to ensure this happens in an orderly way. By getting early visibility of potential financial distress in firms we can intervene faster so that risks are managed and consumers are adequately protected", Mills added.

The data also revealed that between the pre-lockdown period in February and the lockdown across May to June retail investments, retail lending and wholesale financial markets saw increases in liquidity, while insurance brokers, payments & e-money providers and investment managers saw declines.

The FCA also reported that 59% of firms surveyed said they expected the COVID-19 pandemic to have a negative impact on their net income.

However, the regulator couched the data by saying the survey was conducted before the extension of the government’s furlough scheme as well as the positive vaccine developments.

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events


The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...


Greencoat Capital continue strong pipeline of acquisitions after year of...

Greencoat UK Wind PLC's (LON:WIND) Stephen Lillie talks through their results for the year that ended 31 December 2020 with Proactive London. Lillie explains describes 'the enormous amount of investment done, with over £900 million invested and £400 million of new equity raised. It's already...

9 minutes ago

2 min read