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The FCA published in February 2021 its final guidance FG 21/1, clarifying its expectations of firms in relation to the fair treatment of vulnerable customers. The guidance aims to drive improvements in the way firms treat vulnerable consumers so that they are consistently able to achieve outcomes that are as good as those available to everybody else.

What has happened?

The FCA’s October 2020 Financial Lives research showed that 27.7 million adults (53%) in the UK now have characteristics of vulnerability such as poor health, experience of negative life events, low financial resilience or low capability. This figure was increased substantially by the Covid-19 pandemic.

Firms are expected by the FCA to understand what harms their customers are likely to be vulnerable to and to ensure that customers in vulnerable circumstances can receive the same fair treatment and outcomes as other customers. This needs to happen through the whole customer journey, from product design through to customer engagement and communications.

Specifically, to achieve good outcomes for vulnerable customers, firms should take action to:

• • understand the needs of their target market/customer base,
  • make sure staff have the right skills and capability to recognise and respond to the needs of vulnerable customers,
  • respond to customer needs throughout product design, flexible customer service provision and communications, and
  • monitor and assess whether they are meeting and responding to the needs of customers with characteristics of vulnerability, and make improvements where this is not happening

Using the guidance, the FCA will continue to hold firms to account for their treatment of vulnerable customers. Firms can expect to be asked to demonstrate how their business model, the actions they have taken, and their culture ensure the fair treatment of all customers, including vulnerable customers.

Firms have also been reminded that in treating customers fairly, they should also be aware of their obligations under the Equality Act 2010. It is likely that a breach of the Equality Act, for example, failure to provide reasonable adjustments for disabled people, will also be a breach of the FCA’s rules.

How can we help you?

If you’d like to know more about how we can help you with your vulnerable customer arrangements, or any other aspect of FCA compliance, our expert team is here to help. Contact us today on 0207 436 0630 – or email info@thistleinitiatives.co.uk.