FCA ‘right to challenge firms’ to improve on vulnerability

The Financial Conduct Authority has today launched a second consultation on its revised guidance for firms on the fair treatment of customers in vulnerable circumstances, alongside new research on the experiences of vulnerable consumers.

The regulator’s qualitative research concludes that while many firms perform well on vulnerability, “fair treatment of vulnerable customers is not yet being consistently embedded by all firms in their culture” – highlighting four key themes for firms:

  • Recognising vulnerability and understanding customers’ needs
  • The value of sympathy
  • The importance of empowered and knowledgeable staff
  • Meeting vulnerable consumers’ communications needs

The FCA also warns that coronavirus has “significantly increased the number and severity of issues affecting consumers” and that “now more than ever, firms should be paying particular attention to the needs of vulnerable consumers.”

Chris Fitch, Vulnerability Lead Consultant for the Money Advice Trust, said: “This revised guidance makes clear that vulnerability remains at the very top of the FCA’s agenda, where it should be. At a time when millions of peoples’ situations have been turned upside down by the impact of coronavirus, the FCA is right to challenge firms on what more they need to do to support vulnerable customers.

“We welcome the ‘common harms’ that the FCA has now set out, which should encourage firms to think beyond single issues and circumstances, and encompass the complexity of people’s real lives. This is also the first time the regulator has attempted to quantify the costs of responding to vulnerable customers, while balancing this with the benefits this can bring to firms and consumers alike.

“Much of what the FCA has outlined today needs addressing now – there is no time to lose. Fortunately, the financial services industry’s swift response to Covid-19 in recent months has shown that change can happen quickly when it needs to. We look forward to working with firms to help them implement the final guidance.”