Posted: 24th July 2019


On the 23rd July 2019, the FCA launched a new consultation on proposed guidance for firms on the fair treatment of vulnerable customers.

This topic has proven to be of increasing interest to the FCA, and wider population, over recent years. Through various research projects, extensive stakeholder interaction and observational work, the regulator continues to display its genuine care and advocacy for those with less access the financial services industry.

The guidance published is the result of this extensive work, developed with the aim of ensuring that customers in vulnerable circumstances are treated fairly across the sectors under the regulator’s remit.

The FCA states in its press release that many firms have already made significant progress in how they treat vulnerable customers, but that there needs to be more consistency in approach across financial services. In some cases, harm is still being identified.

Christopher Woolard, Executive Director of Strategy and Competition at the FCA, lent his voice to the conversation, suggesting that measures will be taken against firms that fail to meet the regulator’s expectations:

“Protecting vulnerable consumers is a key priority for the FCA and we want to see firms explicitly embedding the fair treatment of vulnerable consumers into their culture. Where we find that firms are not doing enough to ensure that consumers are treated fairly, we will take action.”

The proposal document goes into incredible depth in its guidance, but at a high level we can break this down into:

  • Understand – Firms and their staff need to fully understand the drivers and impacts of vulnerability and the effect this has on customer outcomes
  • Enhance – Firms must ensure their staff have the appropriate knowledge, skills, capabilities and confidence to make judgements in regards to meeting the needs of vulnerable customers. The FCA research suggests that harm can arise from frontline staff not being aware of their firm’s vulnerability policies
  • Take practical action – Firms must design products and services suited to the needs of vulnerable customers and provide good customer service and communications. They will also be expected to monitor and evaluate their performance regularly

Of course, the FCA reiterates that its guidance is not meant to be taken as a checklist of required actions but, rather, a way in which firms can comply with the existing Principles of Business. Firms will have to make their own judgement calls on steps forward, but will be expected to align themselves as closely as possible with the FCA’s guidance.

Next steps

The consultation on this guidance will be undertaken in two stages, with the regulator asking for feedback on the first stage by the 4th October 2019.

The FCA wishes to receive feedback on whether or not the guidance focuses on the issues that really matter to vulnerable customers, the cost-benefit breakdown of proposed changes and whether or not it goes far enough to ensure firms take appropriate actions.

Considerations for firms

Firms should embrace the positive steps taken by the FCA in the protection of vulnerable customers and be sure to follow suit. By offering better protection and services to customers in such circumstances, firms will foster consumer trust and provide their services to a wider section of the population.

A great first step in this will be reading the FCA guidance in full and taking special note of where your firm may not be delivering the outcomes expected by the regulator. This will include looking at product design, accessibility requirements, communication channels and every aspect of the business that may be used by vulnerable customers. They will need to do this on a continuing basis, using critical self-reflection to deliver ongoing improvements.

If one does not already exist, firms should create an internal vulnerability policy that provides frontline staff a framework for acting in the best interests of their customers in vulnerable circumstances.

As we have previously discussed, there are many definitions of vulnerability. The FCA’s Financial Lives Survey revealed that around 50% of the UK adult population show one or more characteristics of being in vulnerable circumstances. Vulnerability can result from multiple challenges – for example, financial hardship, physical or mental health – and so staff must be equipped to support customers through a spectrum of personal, impactful circumstances. Professional training that focuses on dealing with vulnerable customers should therefore be made a priority for firms.

Firms also need to be looking to undertake an assessment of their current policies and procedures to identify where improvements can be made to embed true cultural change.

Once this assessment has been undertaken, firms will be able to understand where they will need to invest in additional, or auxiliary, resource. Having more ‘hands-on-deck’ to deal with routine, day-to-day complaints allows specialist teams to focus on and deliver appropriately enhanced services to vulnerable customers.

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