PIMFA
What is a customer vulnerability?
A customer vulnerability 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.
May 2024
Financial Conduct Authority: identification of consumers with characteristic of vulnerability
The Financial Conduct Authority (FCA) provided further information for firms (Consumer Duty) relating to vulnerable customers, noting the FCA expectation on firms to:
- identify customers in vulnerable circumstances
- understand their needs
- act to meet those needs where necessary
To capture information about customer needs, such as characteristics of vulnerability or for communication firms should:
- set up systems and processes that enable customers to disclose their needs
- support staff to actively identify signs of vulnerability, for instance through training and resources
- try to recognise the needs of consumers and consider different channels to allow consumers to share information about their needs.
- support staff to recognise observable signs of vulnerability and encourage the customer to discuss their needs
15 March 2024
Financial Conduct Authority: Review of firms' treatment of customers in vulnerable circumstances
See the full press release here.
