A Freedom of Information request from trade publication Money Marketing has illustrated the effects of the coronavirus pandemic on advisory firms in the UK. Around one-sixth have sought government support and two-thirds expect short-term reductions in income, but very few firms expect their long-term future to be at risk.
Financial Conduct Authority data shows that 16% of financial advisory firms have accessed a Government-backed support scheme such as the Bounce Back Loan Scheme since the start of the pandemic.
The FCA surveyed 13,000 firms in July to assess their financial resilience amid the inevitable disruption caused by Covid-19.
38% of firms said they had been forced to furlough at least one member of staff.
Perhaps the over-riding theme of the survey results is that most firms expect any financial effects of coronavirus to be relatively short-term. 68% of respondents said they would expect some form of reduction of net income, but 87% of these said that their reduction in income over the next three months would be 25% or less.
53% of firms said that the overall effect of Covid-19 on their business model would be ‘neutral’ and just 1% of advisory firms believed that the pandemic threatened their survival.
6% of respondents said they had either negotiated extensions with creditors or delayed payments such as rent.
Whatever sector of financial services a firm operates in, the last six months or so may have been a tough time. Revenues have reduced in many cases, and in the mortgage and credit sectors, all firms have been forced to offer significant forbearance in the form of payment freezes, interest free overdrafts, etc.
For others, coronavirus might have led to an increase in complaints from customers in adverse financial circumstances.
Some firms might now be under additional scrutiny over how they treat their vulnerable customers – Covid-19 will only have increased the number of vulnerable consumers in the UK.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article