The FCA has recently published guidance aimed at financial firms and banks to ensure firms make improvements in the way they treat vulnerable and at-risk customers. They say this should help people from being victims of mis-selling and suffering financial hardship because of it.
The FCA recent study estimated there are around 27.7 million people in the UK with some form of characteristics of vulnerability and while every individual is responsible for their own choices and decisions, there are some factors that may limit vulnerable people’s ability to make sound financial decisions. These people are more likely to be victims of mis-selling and the FCA wants greater protection to stop this from happening.
The FCA’s finalised guidance says: “We want to see the fair treatment of vulnerable customers embedded as part of a healthy culture throughout firms, not just on the front line but also in areas such as product development. “Firms’ senior leaders should create and maintain a culture that enables and supports staff to take responsibility for reducing the potential for harm to vulnerable customers. They should ensure that firms embed the fair treatment of vulnerable customers in their policies and processes throughout the whole customer journey. We have seen some good examples where commitment comes from the top and where there is a culture of feedback and learning from the front line.”
The pandemic has highlighted how important it is to protect vulnerable people and one of the best ways to do this is for financial institutions and firms to follow strict guidance set out by the FCA. The FCA have now released new guidance on how firms and their staff should ensure vulnerable consumers are treated fairly and they want every company across all sectors to take steps to ensure they understand and respond to the needs of their most vulnerable customers.
Under this new guidance the FCA plans to hold firms accountable when dealing with vulnerable people and can be asked to explain and demonstrate how they deal with vulnerable people, what systems they have in place, what training is given to staff and what actions they take to ensure customers are treated fairly.
Firms are also 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.
Joanna Elson, chief executive of charity the Money Advice Trust, said: “The FCA’s finalised vulnerability guidance published today is a powerful call to action for financial services firms to further improve their work on vulnerability – and comes at a time when millions of people are facing difficulty as a result of the pandemic. Financial services have and will continue to play an important role in supporting people through this crisis. This new guidance, however, provides a crucial steer for firms on what steps they need to take now to ensure their support reflects the complexities of people’s real lives. While we have seen much progress already from firms in recent years through our training work, it is crucial that firms further build on this. We look forward to working with firms to bring the FCA’s expectations into reality for their customers.”