FCA publishes review of firms’ treatment of vulnerable customers

The FCA has published findings from its review of how firms are responding to the needs of customers in vulnerable circumstances. The FCA also sought to assess whether its existing vulnerability guidance remained appropriate in light of the Consumer Duty.

While only 4 in 10 vulnerable customers had disclosed their needs to their financial services provider, those who did were more likely to have better experiences: 74% of those who had disclosed said that staff asked the right questions to understand their situation, and 58% said that their firm took action to provide support they needed.

The FCA found several examples of positive actions by firms across sectors, and a ‘renewed focus’ among firms on delivering good outcomes for consumers in vulnerable circumstances because of the Consumer Duty.

However, it also found a number of areas for improvement, particularly around products and services and outcomes monitoring. The FCA observed that progress shown in its multi-firm work is not yet showing in its UK-wide Financial Lives survey data, which continues to indicate that vulnerable consumers may not consistently receive outcomes as good as those of other consumers.

Overall, both firms and experts considered the vulnerability guidance and the Consumer Duty to be complementary.

Acknowledging that the guidance cannot, and should not, cover case studies on all vulnerability circumstances, experts suggested that it might benefit from the following improvements:

• Additional case studies for specific sectors and on how to treat customers with specific characteristics of vulnerability;
• Further guidance on data-monitoring methods and examples of the types of outcome firms should be measuring;
• Further guidance on how to treat customers who do not disclose vulnerability, both where this is detectable by the firm and in situations where firms don’t ‘have sight of’ their customers; and
• Referencing intersecting impacts of vulnerability drivers and protected characteristics (race, gender, age).

The FCA encourages firms to make use of its examples of good practice and areas for improvement. The latter included: ineffective outcomes monitoring; failure to give appropriate support; failure to communicate clearly to meet the needs of vulnerable customers; and lack of tailored training and embedding consumers’ needs into product and service design.