Upcoming FCA review of firms’ treatment of vulnerable customers: are you ready?
In an FCA statement published on 15 March, it was announced that they are launching a review into firms’ treatment of vulnerable customers.
The review will primarily look at firms’ understanding of the skills and capability of their staff, their product and service design, communications and customer service, and whether these support the fair treatment of customers in vulnerable circumstances and their needs. FCA have said they plan to publish their findings by the end of 2024.
Significantly, but not at all surprising considering the focus of Consumer Duty on actual outcomes, the review will look at the outcomes consumers in vulnerable circumstances receive and whether they are as good as the outcomes of other consumers. This suggests that, for firms included in the review sample, merely describing a control framework on paper is likely to be unsatisfactory. The FCA appear to be implying that: a) the outcomes for vulnerable customers may be different from other customers, and b) they expect firms to be ensuring these outcomes are “as good”. So firms should be able to evidence how they are on top of this and how the outcomes for vulnerable customers are “as good” as those for other customers. This necessitates monitoring, not only of outcomes generally but also specifically of the outcomes received by those groups of customers in the target market that the firm has identified as potentially vulnerable.
We will monitor and update our clients on the FCA’s findings in this area, and what action we think firms should take, when the findings are published. In preparation for enquiry in this area (whether as part of the FCA’s review sample or off the back of other, unrelated communication with FCA), firms should:
Ensure that you have carefully thought about and identified the potential vulnerabilities that may be present in your target market, acknowledging that these are dynamic, and customers may move in and out of a vulnerable state;
Ensure your policies and procedures allow for the appropriate treatment of vulnerable customers; and
Carry out monitoring of vulnerable customer outcomes, the results of which should inform your policy and treatment of vulnerable customers.
If you need help in this area, please get in touch.