Impact of Covid: new FCA guidance on fair treatment of vulnerable customers

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The impact of the covid pandemic has heightened the need to ensure that firms are able to identify vulnerable customers and develop appropriate procedures to ensure that they are fairly treated.  With this in mind the Financial Conduct Authority (FCA) has today published final guidance clarifying its expectations of firms on the fair treatment of vulnerable customers. The guidance aims to drive improvements in the way firms treat vulnerable consumers so that they are consistently able to achieve outcomes that are as good as everybody else.

People can find themselves in vulnerable circumstances at any time. The FCA’s recent Financial Lives research shows that 27.7 million adults in the UK now have characteristics of vulnerability such as poor health, experiencing negative life events, low financial resilience or low capability. Not all people with these characteristics will suffer harm, but they may limit people’s ability to make reasonable decisions or put them at greater risk of mis-selling.

Firms should understand what harms their customers are likely to be vulnerable to and ensure that customers in vulnerable circumstances can receive the same fair treatment and outcomes as other customers. This needs to happen through the whole customer journey from product design through to customer engagement and communications.

Nisha Arora, Director of Consumer & Retail Policy said:

“Protecting vulnerable consumers remains a key focus for us and given the impact of the Coronavirus pandemic, it is more important than ever that firms get this right. The guidance being announced today will help ensure vulnerable consumers are treated fairly and achieve outcomes as good as other consumers.

“While some firms have made significant progress, we want to see all firms across sectors taking steps to understand and respond to the needs of their customers, particularly those who are most vulnerable to harm.

“We also remind customers to tell your providers if you have specific needs – whether that’s due to ill health making it difficult to access a service, or a recent emotional or financial shock that is impacting your finances. Doing this will help firms support you.”

Using the guidance the FCA will continue to hold firms to account for their treatment of vulnerable customers. Firms can expect to be asked to demonstrate how their business model, the actions they have taken and their culture ensure the fair treatment of all customers, including vulnerable customers.

Firms are reminded that in treating customers fairly, they should also be aware of their obligations under the Equality Act 2010. It is likely that a breach of the Equality Act, for example failure to provide reasonable adjustments for disabled people, will also be a breach of the FCA’s rules.

The FCA has also today published a Memorandum of Understanding (MoU) with the Equality and Human Rights Commission (EHRC). This MoU sets out how the FCA will co-operate and work with the EHRC on equalities issues, to help protect people in financial services markets. Sharing information and expertise will help the EHRC and the FCA to act on equalities issues that arise.

This MOU will also support the FCA’s efforts as it seeks to eliminate discrimination and advance equality of opportunity in line with its obligations under the Public Sector Equality duty.

  1. Read the Finalised Guidance (PDF)
  2. Read the Feedback Statement (PDF)
  3. Read the MOU (PDF)
  4. Financial Lives 2020 survey: the impact of coronavirus
  5. The FCA defines 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.
  6. The EHRC is the regulator responsible for enforcing the Equality Act 2010. It safeguards and enforces the laws that protect people’s rights to fairness, dignity and respect. It uses unique powers to challenge discrimination, promote equality of opportunity and protect human rights across Great Britain.

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