FCA vulnerable customer guidance is not a new concept with this being one of the key priorities for the regulator alongside customer focused standards such as TCF. The FCA published final guidance paper FG21/1 in February 2021 which provides extended guidance for firms authorised by the regulator.
This paper goes above and beyond the generic guidance already set out by the FCA and provides working examples of how firms can achieve good outcomes when it comes to supporting vulnerable customers. The paper also provides information on the controls and measures that businesses can use to ensure the fair and consistent treatment of those who are considered vulnerable.
FCA Statement on Vulnerable Customers
A vulnerable customer is someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care…
Anyone Can Be Vulnerable!
The FCA stress throughout their guidance that becoming vulnerable can happen to anyone at any time. Assessing target markets and existing customers can identify who may be vulnerable or more suseptible to harm.
However, this method of evaluation doesn’t account for temporary vulnerabilities that may not have been apparent before, such as bereavement, illness or financial detriment.
Vulnerable Customer Policy & Toolkits
FCA Vulnerable Customer Actions
The key actions that the FCA expect firms to consider are: –
- Understanding Customers’ Needs – assessing target markets and existing customers to understand the nature and scale of any vulnerabilties. Evaluating what impact, harm or disadvantage customers may experience from the firms’ services, products or activities.
- Staff Skills & Capability – training, support and evaluation are the key words for staff and vulnerable customer awareness. Vulnerable customer standards must be embedded into all business practices, including dedicated training sessions and employee support programs. Frontline staff should be assessed for the appropriate skills and capabilities to support vulnerable customers.
- Monitoring & Evaluation – management information and regular reviews of the controls and systems that are in place to support vulnerable customers. Ensuring follow up and improvements are made where applicable and patterns of concern are easily identified.
- Product & Service Design – products and services should be suitable and flexible for all customers and those who are vulnerable should be considered throughout the design and implementation process.
- Customer Service – flexible customer service and support for those who are vulnerable and ensuring that there are no obstacles or barriers to making contact in a simple way. Systems and processes that are customer driven, ensuring accounts contain all relevant details.
- Communications – reviewing all forms of customer communication to ensure they are appropriate, understandable and adequate. Consider areas such as letters, websites, agreements, emails, SMS and other ways that firms interact with their customers.
- Signposting – ensuring that customers always know about and have access to specialist support and external help should they need it. Such support should be signposted during phone calls, on letters and other communications and on websites.