FCA publishes guidance on treatment of vulnerable customers
'Embedded culture'
The Financial Conduct Authority (FCA) has published a 41-page piece of guidance for businesses on how to better treat vulnerable customers.
The document was split into a number of sections: understanding the needs of vulnerable customers, skills and capability of staff, product and service design, customer services, communications, and monitoring and evaluation.
How to approach the 'vulnerable' customer?
Fundamentally, the FCA said it wanted to see firms doing the right thing for vulnerable consumers and have that embedded in their culture.
The main aim, it said, was for firms to be more focused on ensuring outcomes for vulnerable customers were at least as good as those of other clients.
It also wanted to see greater consistency across both firms and sectors so vulnerable customers are treated fairly no matter what financial service or product they are buying.
Its guidance was based around five of the FCA's fundamental principles that relate most to the fair treatment of vulnerable customers. These are laid out in the table below.
Who are vulnerable customers?
For the purposes of the guidance it set out, the regulator said a vulnerable customer is someone who "due to their personal circumstances is especially susceptible to detriment", with the definition being intentionally broad.
It added: "Some consumers will be actually vulnerable because of their personal circumstances. Actual vulnerability can be permanent but is often transient because consumers' circumstances constantly change. This can cause consumers, who had not previously been vulnerable, to become so at some stage of their life."
The FCA said examples of vulnerability could include health conditions or illnesses that affect the ability to carry out day-to-day tasks, the low ability to withstand financial or emotional shocks, major life events such as bereavements or relationship breakdowns, and low knowledge of financial matters.
The guidance will be consulted on in two phases. The regulator is looking for comments on the first stage of consultation by 4 October 2019.
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FCA executive director of strategy and competition Christopher Woolard said: "Protecting vulnerable consumers is a key priority for the FCA and we want to see firms explicitly embedding the fair treatment of vulnerable consumers into their culture.
"Where we find that firms are not doing enough to ensure that consumers are treated fairly, we will take action.
"Firms need to take particular care to ensure that vulnerable consumers are treated fairly as they may be more likely to experience harm.
"The guidance should drive improvements across the industry, improving outcomes for millions of vulnerable consumers."
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