HomeCoronavirus4,000 financial firms in the UK at risk of collapse

4,000 financial firms in the UK at risk of collapse

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The Financial Conduct Authority said on Thursday that around 4,000 financial firms in the United Kingdom were at great risk of collapsing as a consequence of the first wave of the Covid-19 pandemic.

The Financial Conduct Authority surveyed 23,000 financial firms to check on their resilience to COVID-19, which last year triggered Britain’s worst economic downturn in 300 years.

Sheldon Miles, the FCA Executive Director of Consumers and Competition stated: “At end of October we’ve identified there are 4,000 financial services firms with low financial resilience and at heightened risk of failure. These are predominantly small and medium-sized firms and approximately 30% have the potential to cause harm in failure.”

The survey showed that insurance intermediaries and brokers, payments and electronic money, and investment management firms showed a drop in liquid assets like cash that is needed to bolster their defenses in a downturn.

The FCA urged caution in interpreting the survey’s results as the survey was completed before the extension of the government’s furlough scheme, and vaccine developments.

The survey looked at financial firms that are only regulated by the FCA and did not cover the 1,500 largest firms in the financial sector which are regulated for financial stability by the Bank of England’s Prudential Regulation Authority.

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