Guidance on looking after vulnerable clients. 


The treatment of vulnerable customers accessing retail financial services is a hot topic, and rightly so. A new consultation from the Financial Conduct Authority (FCA) has proposed guidance for financial services firms to ensure they treat vulnerable customers fairly.


Within the consultation, the FCA sets out its view on what their Principles mean in terms of how firms need to treat their vulnerable customers and ensure fair treatment across various sectors.


The FCA is calling on firms to ensure that the fair treatment of vulnerable customers is deeply embedded within firms’ cultures, so it goes right to the heart of each organisation.


They say in the consultation that firms will need to consider what the guidance means for their business, and how they are understanding and addressing the needs of vulnerable customers.


As part of this work, the FCA has been working with stakeholders to understand which areas to address. They have found that many financial services firms are making significant progress, but they are calling for greater consistency across the profession, to ensure that all vulnerable customers are treated fairly.


Christopher Woolard, Executive Director of Strategy and Competition, said:


“Protecting vulnerable consumers is a key priority for the FCA and we want to see firms explicitly embedding the fair treatment of vulnerable consumers into their culture. Where we find that firms are not doing enough to ensure that consumers are treated fairly, we will take action.


“Firms need to take particular care to ensure that vulnerable consumers are treated fairly as they may be more likely to experience harm. The guidance should drive improvements across the industry, improving outcomes for millions of vulnerable consumers.”


The FCA is consulting on this new guidance in two stages, with the first stage of the consultation closing for comments on 4th October 2019.


Responding to the consultation, debt charity StepChange called it a positive move, but said more needs to be adopted in practice. 36% of the charity’s clients had additional vulnerabilities last year, making a strong connection between debt issues and customer vulnerabilities.


Of course, it’s not just people experiencing problem debt who face additional vulnerabilities, which need to be considered when dealing with financial services firms.


A range of factors can result in client vulnerability, including poor health or traumatic events in life. As Financial Planners, we always need to consider these vulnerabilities and how we can most effectively safeguard our clients, during temporary or permanent periods of vulnerability.


The FCA has identified that as many as half of UK adults are potentially vulnerable, so this is a widespread issue and something that has become increasingly common.


Commenting on the new draft guidance, StepChange Head of Policy Peter Tutton, said:


“Our research shows the extra problems vulnerable people can face and the difficulty of resolving problems. This FCA guidance is a vital step to a market that works well for all people.


“We look forward to the focus it should produce on ensuring products and services take account of the needs of vulnerable consumers by design. So we welcome the FCA’s new guidance, and urge the regulator to implement it as soon as practical and to monitor it closely.”

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