What is a vulnerable customer?
The FCA defines a vulnerable customer as ‘someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care.’ The definition of vulnerability is very broad and is deliberately not restricted to certain identifiable groups (the elderly, the disabled, those with dementia etc) but applies to anyone where circumstances or events place them in a vulnerable state.
Vulnerable clients and how to identify, support and achieve good outcomes for them should be on every firm’s agenda. The FCA’s new consumer duty clearly emphasises the importance of vulnerability considerations and reinforces the FCA’s previous guidance on vulnerable customers. Its focus is on ensuring positive outcomes for all consumers including those with vulnerable characteristics. A good vulnerability strategy not only meets the FCA’s regulatory expectations, but also creates an opportunity for firms to serve all customers better, instil trust and enhance reputations.
We run a Vulnerable Customers Working Group. If you would like to get involved, please email Alexandra Roberts
Vulnerable Customers have been a central focus for the FCA since 2015, and was at the heart of their 2017 Mission Statement and remains a clear priority in all subsequent FCA Business Plans.
In 2021 the FCA published its finalised ‘Guidance for firms on the fair treatment of vulnerable customers’ in which it sets out the steps it expects firms to take and makes it clear that it will take action if it finds that firms are not doing enough to ensure that consumers are treated fairly. The pandemic and the continuing economic outlook, as evidenced by the cost of living crisis, has made vulnerable customer issues even more important and pressing.
The latest edition of the FCA’s Financial Lives survey, carried out between February and June 2022, makes for fairly bleak reading with the overall proportion of UK adults with characteristics of vulnerability increasing from 46% to 47% (mainly due to low resilience) – an increase of nearly 1 million. Now, with the introduction of consumer duty, vulnerability considerations are of clear importance in implementing the new outcomes and should be a central element of implementation plans.
Our guide to Vulnerable Customers
This guide sets out to explain how firms can support and achieve good outcomes for their vulnerable clients.
Head of Regulatory Policy and Compliance
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