Consistent approach to vulnerability data needed as regulators flex muscles

by | Dec 15, 2022

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The FCA is beginning to “flex its muscles” with notices issued to firms needing more data on vulnerability – a Consumer Duty expert has warned.

The regulator has started to use its Section 165 powers to issue notices to firms, requesting more data to meet the vulnerability monitoring requirements of Consumer Duty.  

Ahead of implementation in July next year, firms have a responsibility to understand how Consumer Duty is being implemented across the value chain. Manufacturers have until April 2023 to inform intermediaries of how they are going to implement Consumer Duty and understanding and communicating vulnerability is a key part to this.


The regulatory action follows a huge variation in the proportions of consumers being identified as vulnerable. Andrew Gething (pictured), Consumer Duty expert and manging director of MorganAsh argues this is most likely due to the way vulnerability is measured, rather than radically different cohorts of consumers.

Andrew comments: “The key issue is there are still firms who are only reporting the proportion of vulnerable customers in single figures. The reality is they are just not assessing their customers or recording their vulnerability in any sort of consistent manner. It therefore comes as no surprise to see the FCA flexing its muscles and issuing notices in preparation for July.”

A good approach for firms is to compare the proportions and severity of vulnerable customers against the FCA Financial Lives survey.  While each firm will be different, the data is based on 13,000 consumers and provides both a clear benchmark and a good place to start.


MorganAsh has been supporting firms across the financial services sector in their preparations for Consumer Duty. Earlier in the year, MorganAsh launched MARS – the MorganAsh Resilience System, a new online tool that provides brokers and advisers with a consistent and objective approach to manage and monitor vulnerability.

Andrew adds: “A simple measure is to understand the proportions of vulnerable consumers being identified. Using the MorganAsh MARS tool, customers are reporting the proportion of vulnerable customers around the 50 percent mark, in line with the FCA’s Financial Lives Survey. Although there is variation by age and between each firm.

“We are seeing results slightly higher than the FCA Financial Lives Survey, but this is probably due to the cohorts of customers we are starting with, where there are proportionally more vulnerable. Nonetheless, the data shows the clear disparity in vulnerability assessments. It should all serve as a reminder to firms that a consistent approach to vulnerability assessments is necessary to produce the required data for both the regulator and for Consumer Duty.”


* Figures in the above graph are representative and do not relate to any one company.

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