PIMFA
Customer Vulnerability
- What is customer vulnerability?
A vulnerable customer is “someone susceptible to harm due to their personal circumstances, especially if a financial services firm is not acting with appropriate care.”¹ All customers are at risk of becoming vulnerable, but the risk is increased by particular characteristics, which could include poor health, certain life events, low resilience to cope with financial or emotional shocks, or low literacy or numerical capability.
The 2021 FCA guidance, ‘Guidance for firms on the fair treatment of Vulnerable Customers’, sets out expectations for firms, and the Consumer Duty has further emphasised the importance of vulnerability and has created further guidance and opportunities for firms to support customers.
- Key FCA expectations for firms:
- Consider the diverse needs of your customers at every stage of the customer
journey and across the product and service lifecycle. - Have effective systems and processes in place.
- Have effective staff training in place.
- Be proactive. Don’t just wait for customers to tell you about vulnerability.
- Take action. Identification of customers with characteristics of vulnerability isn’t an end in itself.
- Monitor the outcomes experienced by customers in vulnerable circumstances and continually improve
This guide provides support for firms to identify, support and achieve good outcomes for vulnerable customers.
latest news
FCA investment firms review: supporting bereaved customers
The FCA has issued a press release noting a review of whether investment firms are doing enough to support bereaved customers.
The review includes platforms, advisers and wealth managers and will:
- Examine customers’ experience upon disclosure of a bereavement to settlement or transfer of investments
- Assess how firms communicate, how they support vulnerable customers, their service standards, and how fees are handled on bereaved accounts
The FCA advises selected firms will be contacted as part of the review, with findings to be published later this year, highlighting good practice and areas for improvement.
Read the press note here.
Financial Ombudsman Service vulnerability policy
The Financial Ombudsman Service (FOS) has published its vulnerability policy, setting out the key principles, processes and governance structures the FOS uses to help identify and support vulnerable customers.
Read the vulnerability policy here.
The FOS has also published a blog about inclusion and vulnerability (by Rachel Lam, FOS Interim Ombudsman Managing Director) – access the blog here.
FCA Blog on Supporting Customers in Challenging Times
In a recent blog, the FCA reiterated its expectations for firms in supporting customers facing financial difficulty and vulnerability, particularly in the context of wider cost of living and wellbeing pressures.
The FCA emphasised the importance of identifying customers who may be experiencing financial or personal distress and ensuring that appropriate support is provided at an early stage, in line with existing guidance and regulatory standards. The blog also underlines the role firms play in delivering good outcomes for customers during periods of heightened financial stress.
Read the blog here
