New Consumer Duty must do more for victims of economic abuse
The Financial Conduct Authority (FCA) has confirmed plans to release its new ‘Consumer Duty’ which sets expectations for financial firms’ standards of care towards consumers.
The charity Surviving Economic Abuse (SEA) has warned that the new Duty does not go far enough in its guidance on economic abuse and urges the FCA to give financial firms strong and clear direction on how they can protect victim-survivors.
Dr Nicola Sharp-Jeffs OBE, founder and CEO of Surviving Economic Abuse (SEA) said: “We welcome the new Consumer Duty which has the potential to make a great difference to victim-survivors of economic abuse. It’s particularly encouraging to see the proactive approach highlighted in the Duty, seeking to avoid harm in the first place.
“However, the lack of specific reference to economic abuse within the Duty is a missed opportunity to improve responses among financial services, a sector which has an unrivalled ability to reach those experiencing abuse. Economic control within the context of domestic abuse results can result in devastating outcomes, including homicide and suicide. The FCA must provide guidance in this area, especially when some financial services firms are much further ahead in their understanding of economic abuse than others.”
SEA has urged the FCA to work together with expert organisations to develop clear guidance for the financial sector – including examples of the differences of good and bad practices, enabling firms to properly embed an understanding of economic abuse into their existing policies and collect the data required to ensure effective change is driven.
SEA is calling for the FCA to provide direction for firms to:
- Improve their systems of capturing and sharing information so that vulnerable customers – such as those experiencing economic abuse – do not fall through the net and firms learn from their experiences. Only high-quality management information will enable firms to ensure they have a comprehensive overview of whether vulnerable customer outcomes are being achieved.
- Sign up to the UK Finance 2021 Financial Abuse Code so that staff are clear about what is expected of them.
- Educate and train their staff to recognise economic control experienced by their customers, how to record it and be clear on practical procedures for supporting such customers.
Case study – Annie*
“I was let down by my bank failing to recognise my experience of economic abuse at every point along my journey. From encouraging me to take out a personal loan to pay off the £7,500 overdraft on the joint bank account which he had run up, to taking funds directly from my account when he ran it back up again. Finally, they summoned us both to a meeting and told him they’d be drawing funds from his account. Outside the bank he swung a punch at my face and as I ran off to go back to work, said: ‘You can run but I am going to finish the job when I get home.’ That day I fled to a refuge in fear of my life.”
*not real name