Protecting Vulnerable Customers
Protecting vulnerable consumers has long been a key priority for the FCA. Its Financial Lives Survey showed that a staggering 50% of UK adults display one or more characteristics of being potentially vulnerable. The impact on vulnerable customers when things go wrong can be much greater than for other customers.
In spite of steps taken by firms and the FCA to improve treatment of vulnerable customers, the FCA has found that there is still room for improvement. The Guidance they are consulting on is designed to provide clarity for firms about their expectations, in the hope that firms will treat all customers, including vulnerable customers, fairly. It will use the Guidance to monitor how firms treat vulnerable consumers and to hold them to account if they breach the FCA principles as they relate to vulnerable customers.
They “want to see the right thing for vulnerable customers deeply embedded in the culture of firms, and as a result:
- firms to be more focused on ensuring that the outcomes experienced by vulnerable consumers are at least as good as those of other consumers: and
- greater consistency across firms and sectors so that vulnerable consumers are treated fairly in whatever financial service or product they buy.”
The FCA expects firms to understand the needs of vulnerable consumers in their target market and customer base, and ensure their staff have the skills and capability to address their needs. Firms are expected to translate their understanding of the needs of their vulnerable consumers into practical action in terms of how they design their products and services to take into account the needs of vulnerable consumers, how they ensure the level of customer service they provide meets the needs of vulnerable consumers, and how they communicate with vulnerable consumers.
Firms are expected to build a process to monitor outcomes experienced by vulnerable consumers, and learn from this process to continuously improve and update how they treat vulnerable consumers.
The guidance poses some serious challenges for banks. Increasingly there is a propensity to rely on digital channels to deliver products and services. How will banks comply with this guidance when they seldom have personal contact with their customers? How will they meet the training requirements to identify and respond to the needs of vulnerable customers? And how will they build fair treatment of vulnerable customers into their product and service development?
In this webcast, Caroline Barr discusses the above.
Caroline Barr is a Member of the Financial Services Consumer Panel, having served on that Panel for nearly 6 years. She is also an Independent Non Executive Director of BlackRock Life Limited and the British Insurance Brokers Association. She has worked in the Treasury on a range of policies, including financial services. She has a background in banking, and was made an Associate of the Chartered Institute of Banking in 1997. She is a strong proponent of increasing professionalism in banking, and supports the work of the Chartered Banker Institute.