The Financial Conduct Authority (FCA) has published a review of how financial firms are treating customers in vulnerable circumstances. This follows the introduction of the Consumer Duty in July 2023, which requires firms to act to deliver good outcomes for all customers, particularly those facing financial, health, or other personal challenges.
The FCA's assessment highlights examples of good practice while also identifying key areas where firms must improve to meet regulatory expectations.
Key Findings: Progress and Challenges
The review focused on four key areas: governance and outcomes monitoring, consumer support, consumer understanding, and product and service design.
✅ Examples of Good Practice:
- Data-driven decision-making – A small number of firms effectively used customer data to monitor outcomes and identify where vulnerable customers were experiencing worse results.
- Tailored consumer support – Some firms offered flexible, personalized assistance, ensuring vulnerable customers received appropriate help.
- Clear and timely communication – Firms that simplified language and ensured timely updates helped customers make informed decisions.
- Inclusive product design – Companies incorporating customer feedback into product and service development ensured better accessibility and usability.
⚠ Areas Needing Urgent Improvement:
- Ineffective customer outcome monitoring – Many firms lacked a clear framework to track whether vulnerable customers were receiving fair treatment.
- Inadequate support services – Some firms failed to provide appropriate assistance, especially for bereavement cases and power of attorney processes.
- Unclear communication – A lack of transparency and accessible communication left many customers confused about their financial options.
- Insufficient staff training – Employees in key roles often lacked the training needed to identify and assist customers in vulnerable circumstances.
What Firms Must Do to Comply with Consumer Duty
To align with the FCA’s Consumer Duty requirements, firms must take the following actions:
🔍 Governance & Monitoring:
- Regularly assess customer outcomes to identify and resolve any unfair treatment.
- Ensure senior leadership actively engages in improving outcomes for vulnerable customers.
- Implement data-driven insights to track customer experiences across different demographics.
📞 Consumer Support:
- Identify and assist vulnerable customers early, offering personalised support.
- Train frontline staff to recognize signs of vulnerability and adapt their approach accordingly.
- Ensure customer service teams have the flexibility to handle complex cases such as bereavement and power of attorney with care.
📝 Consumer Understanding:
- Ensure communication is clear, jargon-free, and accessible across multiple channels (phone, online, in-person).
- Test customer understanding of key information and adapt communications based on feedback.
- Offer a variety of communication methods to suit different customer needs, including those who are digitally excluded.
💡 Product & Service Design:
- Design products with vulnerable customers in mind, ensuring they are accessible and suitable.
- Engage with external experts and consumer feedback to develop inclusive financial products.
- Implement data-driven testing to ensure financial products meet customer needs without creating unnecessary harm.
Looking Ahead: Firms Must Step Up Their Efforts
The FCA’s review emphasizes that there is no one-size-fits-all approach to supporting vulnerable customers, as firms' responsibilities will depend on their business model, size, and customer base.
However, firms that fail to improve risk regulatory intervention and reputational damage. The FCA urges all financial institutions to embed vulnerability considerations into their operations and proactively work to deliver fair and positive customer outcomes.
By addressing these gaps, firms can build trust, enhance customer experiences, and contribute to a more inclusive financial system.
Please let a member of the team know if you need support with identifying, monitoring, and managing vulnerability.