The Financial Conduct Authority (FCA) have today confirmed their new guidance on the treatment of vulnerable customers.
Commenting on the update, Peter Tutton, Head of Policy at StepChange said: “We strongly support the FCA’s focus on increasing its expectations of firms to ensure they treat vulnerable customers fairly, and give more bespoke attention to the individual protections that they need. Among households experiencing problem debt, vulnerability is common. Among StepChange clients in 2020, 50% were in a vulnerable situation – up from 44% in 2019. This demonstrates that vulnerability is far from a niche issue, and suggests that people in vulnerable situations are particularly at risk of debt.
“To counter this, it is vital that financial services work for everyone. They must not exploit people in vulnerable situations upfront, nor treat them without due care if they experience vulnerability after taking out a financial product. The guidance is welcome but has limited statutory bite to protect vulnerable consumers. We would like to see a duty of care embedded in the legislative framework, that would prevent firms from exploiting consumer vulnerabilities, behavioural biases or constrained choices, along with more stringent monitoring and enforcement to ensure firms really put the guidance into practice.”