Fears of a Spike in Financially Vulnerable Brits on ‘Divorce Day’

• A fifth (21%) of Brits left financially vulnerable due to the demise of a relationship
• 16% of Brits trapped in unhappy relationships as they can’t afford to live alone
• Almost 1 in 10 (9%) say they would leave their partner today if they could afford it
• Fears of an increase in financial vulnerability on national ‘Divorce Day’ when law firms see a spike in divorce filings as pandemic and higher living costs take their toll

London, 10 January: As we approach what is unofficially known as ‘Divorce Day’ – the first working Monday following the Christmas period when law firms typically see a spike in divorce filings – new research^[1] warns of a potential spike in financial vulnerability.

Research commissioned by Kalgera, an AI powered platform designed to help banks and financial institutions identify and protect vulnerable customers from financial harm, found that more than a fifth (21%) of Brits have been left financially vulnerable following the end of a relationship.

The impact of the ongoing pandemic to health and wellbeing, coupled with the challenges of homeschooling have intensified pressures for families and couples since March 2020. Added to this, fears over job security against rising living costs have compounded money worries for many, putting strain on relationships.

The research suggests we can expect to see more divorce filings on Monday as 13% of people say they are in an unhappy relationship while 7% plan to leave their partner within the next six months.

Alongside the emotional heartache, the effects of a divorce can have a devastating impact on personal finances. Almost a fifth (18%) of Brits say they have found themselves in a financially precarious situation, including bankruptcy, following a breakup while 16% say a divorce has left them with debt that will take more than six months to clear.

Kalgera warns this could lead to a rise in the number of people experiencing financial vulnerability, which has already increased since the start of the pandemic^[2], and therefore more susceptible to falling victim to increasing sophisticated scams designed by criminals to defraud people out of money.

Founder of Kalgera, Dr Dexter Penn, said:‍

“The breakdown of a long-term relationship is a major life event, not just emotionally but also financially. We have seen a concerning increase in the number of people displaying characteristics of financial vulnerability as a result of the pandemic. The financial shock of the loss of a partner is likely to exacerbate the situation. Our research suggests we may see a high number of breakups and divorce proceedings as the strain of the last two years takes its toll.

“The psychological stress of heartbreak and financial worries negatively impacts concentration and mental health. The combination makes us all more vulnerable and sadly, more susceptible to convincing and opportunistic fraudsters. During these challenging times, it’s important to look after ourselves and our loved ones, remain vigilant and seek help and raise concerns if something doesn’t seem right.”  

The turmoil of a breakup can have a profound effect on day-to-day life for many people. Almost a quarter (23%) have suffered mental health issues as a result of a relationship ending and 19% say they are less able to cope with everyday life as well as they could before. These factors can significantly impair a person’s judgements, and potentially deplete their bank balance if lured by a fraudster.

On the other hand, the research also suggests some people are trapped in unhappy unions due to money worries. ​​16% of Brits claim they cannot leave their current relationship as they do not have enough money to live by themselves and almost one in 10 (9%) say they would leave their partner today if they could afford it while 8% say they got into a relationship because they could no longer afford to be alone.

Marcie Shaoul, Director of The Co-Parent Way said: “When divorcing or separating from a partner, it is easy and common to be caught up in high levels of emotion. When we feel like this it can be really hard to make clear decisions about your welfare, your financial welfare, or the welfare of your children. Today’s figures showing the increase in people divorcing are worrying, not least because more people may be left in a financially and emotionally vulnerable position. Getting the right support during divorce is essential for wellbeing and resilience as well as our financial security, and the continued wellbeing of children.”

Since the beginning of the Pandemic, nearly one in 10 (9%) Brits have completed divorce proceedings and a further 5% are currently going through divorce proceedings.

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^[1] Commissioned by Kalgera, conducted by Opinium Research with an online sample of 2,001 nationally representative UK adults between 30 Dec 21 and 4 Jan 22.

^[2] FCA Financial Lives 2020 survey: impact of coronavirus

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About Kalgera

Kalgera, a London-based RegTech, is the first line of defence for financial institutions who want to actively support its most vulnerable customers. By helping the finance sector identify customer vulnerability through transactional data, Kalgera creates better outcomes for the customer and the financial institution itself.

We are committed to working with banks through several avenues to comply with the FCA's Consumer Duty Act. Kalgera’s state-of-the-art technology uses 11 parallel AI models to pinpoint vulnerability to financial abuse and low financial resilience with greater precision.

You can find our online training, in association with the London Institute of Banking and Finance (LIBF), here and more information over at our website.