July 12, 2024

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Up to 4,000 Economic Companies Could Fail Due to COVID, Says United kingdom Regulator | Investing News

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Up to 4,000 Economic Companies Could Fail Due to COVID, Says United kingdom Regulator | Investing News
Up to 4,000 Economic Companies Could Fail Due to COVID, Says United kingdom Regulator | Investing News

LONDON (Reuters) – All over 4,000 economical companies in Britain were at “heightened possibility” of collapsing thanks to fallout from the first wave of the pandemic, the Economic Perform Authority reported on Thursday.

The FCA surveyed 23,000 monetary corporations to verify on their resilience to COVID-19, which past yr triggered Britain’s worst financial downturn in 300 several years.

“At close of Oct we’ve discovered there are 4,000 fiscal products and services companies with minimal economical resilience and at heightened possibility of failure,” claimed Sheldon Mills, the FCA’s government director of consumers and competitors.

“These are predominantly small and medium sized companies and approximately 30% have the prospective to cause harm in failure.”

The FCA faced potent criticism that it was “deficient” in dealing with the collapse of the London Money & Finance investment decision fund in 2019, and the watchdog is below major pressure to prevent delays in mitigating damage to investors from other struggling firms.

The survey confirmed that insurance policy intermediaries and brokers, payments and electronic funds, and investment decision management corporations confirmed a drop in liquid assets like dollars that is desired to bolster their defences in a downturn.

But the FCA urged warning in deciphering the survey’s results.

“In addition, this survey was carried out prior to the extension of the government’s furlough scheme, the beneficial vaccine developments and the announcement of new principles and restrictions,” the watchdog said.

The survey looked at financial companies that are only regulated by the FCA, and did not deal with the 1,500 greatest companies in the economic sector which are controlled for economic security by the Bank of England’s Prudential Regulation Authority.

(Reporting by Huw Jones, enhancing by Sinead Cruise)

Copyright 2021 Thomson Reuters.

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