What has happened?
The FCA issued in early August new best practice guidance (GC 20/3) for firms to do more to protect vulnerable consumers. Given that more than 24 million people display one or more potential characteristics of vulnerability, including physical and mental health issues, recent life events such as bereavement, capability and financial resilience and that over a million people received debt advice last year. The guidance also covers the effects of coronavirus and is open for consultation until 30 September 2020.
What do you need to do?
The FCA believes that firms should do more to ensure that vulnerable consumers are receiving positive outcomes. The consultation incorporates feedback from a range of bodies including consumer organisations, firms and trade bodies following the first phase of consultation in July 2019.
The FCA found many examples of good practice and firms that are thinking carefully about their customers and potential vulnerability. However, it is also aware of cases where vulnerability is either not considered by firms or is positively exploited for gain. The guidance aims to provide a framework that allows all firms to accurately assess whether they are treating vulnerable consumers fairly, ensuring consistency of treatment across the financial services sector.
Alongside the draft guidance, the FCA has published research on vulnerable consumers’ experiences of dealing with financial services firms. The research, which includes 21 in-depth case studies of consumers displaying a range of indicators of vulnerability, highlights four key themes for firms, which are:
The FCA will monitor how firms respond to this guidance through its supervisory work. Firms will need to be able to demonstrate how their culture, policies and processes ensure the fair treatment of all consumers, including those who are vulnerable. In 2023, the FCA plans to evaluate what action firms have taken and whether improvements have been seen in the outcomes experienced by vulnerable consumers.
How can we help you?
If you’d like to know more about how we can help you with treating your customers (including vulnerable customers) fairly 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.