The Financial Conduct Authority has today announced its finalised guidance for firms on the fair treatment of customers in vulnerable circumstances. The Money Advice Trust has welcomed the new guidance, which it called a “powerful call to action” for firms on vulnerability, especially in the wake of Covid-19.
Findings from the regulator’s qualitative research published last year at the time of its consultation showed that while many firms were performing well on vulnerability, vulnerability was not consistently embedded in their culture.
Today’s FCA guidance outlines the further work firms need to do to improve outcomes for customers in vulnerable circumstances. It comes at a crucial time with millions of people having to deal with the impact of Covid-19 on their finances and with the FCA’s own estimates showing that 27.7 million UK adults are in circumstances (life, health, or financial) which could make them vulnerable to harm.
Joanna Elson CBE, chief executive of the Money Advice Trust, said: “The FCA’s finalised vulnerability guidance published today is a powerful call to action for financial services firms to further improve their work on vulnerability – and comes at a time when millions of people are facing difficulty as a result of the pandemic.
“Financial services have and will continue to play an important role in supporting people through this crisis. This new guidance, however, provides a crucial steer for firms on what steps they need to take now to ensure their support reflects the complexities of peoples’ real lives.
“While we have seen much progress already from firms in recent years through our training work, it is crucial that firms further build on this. We look forward to working with firms to bring the FCA’s expectations into reality for their customers.”
Chris Fitch, Vulnerability Lead Consultant for the Money Advice Trust, said: “Today’s guidance represents the end of a policy process that the FCA first began in 2015 but marks the start of a practical challenge for firms to now deliver the customer outcomes required.
“The FCA rightly highlights the progress made by firms on vulnerability. Firms, however, should not see this as an ‘end game’. Instead, today’s guidance is a plan of action to be practically implemented. In doing this, firms need to identify vulnerability where it exists, encourage more customer disclosure of support needs, and design accessible, useable, and inclusive products that benefit everyone.
“Firms should also think beyond single issue causes of vulnerability, and focus on the common harms that different customer groups will face – only this can benefit the greatest number of consumers.
“Given the vulnerabilities that existed prior to Covid-19, and those that have emerged since, this challenge is pressing. The new guidance from the FCA will help firms to go further to ensure all customers are being treated fairly, regardless of their circumstances. We look forward to working with firms to help achieve this, and to monitor and evaluate the overall impact of the guidance.”
The guidance includes references to recently published work on GDPR and vulnerability, by the Money Advice Trust and Money Advice Liaison Group, and inclusive design, by the Money Advice Trust and Fair By Design.