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The Importance of Being Ahead of the Curve - Vulnerability

Clearly, vulnerability is becoming a central issue in society, as can be seen by the increase in the usage of the word over time.

The days of keeping illnesses to yourself are eroding as society changes to a more open, accepting and non-judgemental outlook. As vulnerability and mental health are discussed more, customers seem more willing to ask for help when it is needed. Only last week a client of ours received a call from a customer who was suicidal. Gladly the agent followed the training we had provided to them and the emergency services were able to intervene in time. What a difference a small piece of training made!

In July the FCA released its consultation on proposed guidance for firms on the fair treatment of vulnerable customers, running until October 2019 with a view to releasing a guidance document for firms in 2020. Why not get ahead of the curve and implement the key suggestions now? The importance of doing so cannot be underestimated, not only to ensure compliance against existing FCA requirements or expectations as set out in CONC and in the Occasional Paper No.8 but, more importantly, to make sure your firm is doing everything it can to help those customers in need.

In fact, the TCF principles ask us to place the customer at the heart of what we do, can we claim compliance with TCF if we wait until the guidance is released before we implement the proposed changes which would clearly benefit customers? This article ‘picks out’ those changes so you can be ‘ahead of the curve’.

The guidance consultation sets out elements of the FCA’s background research, shedding light on their approach. Briefly, they:

  • Make a distinction between a customer who is potentially vulnerable and a customer who is actually vulnerable, arguing that it is important for firms to be just as aware of customers who are potentially vulnerable, as it may lead to actual vulnerability.

  • Suggest four key drivers of vulnerability: health; life events; resilience; capability

  • Highlight that half of all UK adults display one or more characteristics of being potentially vulnerable.

  • Set out some of the consequences of vulnerability, including impacts on their engagement with the financial services sector, in particular their ability to represent their own interests.

  • Find that the impact of non-standard needs can be made worse by firms’ behaviour.

  • Find that the financial impact of poor decisions made by vulnerable customers who do not have access to the right support can have long-term effects.

  • Identify potential harms vulnerable customers are more likely to experience: financial exclusion; difficulty in accessing services; partial exclusion; disengagement with the market; falling victim to scams; over-indebtedness; increased exposure to mis-selling; inability to manage a product or service; purchasing inappropriate products or services.

So what can you do now?


The first suggestion within the consultation is to audit your current processes against those that will be suggested in the guidance, therefore our suggestion is to carefully list the non-controversial suggestions in the consultation and use this as the basis of an internal audit.

Potentially Vulnerable Customers

Secondly, you can add to your processes to automatically flag customers or potential customers who show signs of potential vulnerability, using conversations and / or data to identify concerns around health, life events, resilience and capability (I.e. through poor financial decisions). Where customers display characteristics of potential vulnerability your firm should reach out to the customer to offer assistance. Examples of good practice in this area include the analysis of available data to identify patterns of behaviour to target extra help and support to potentially vulnerable consumers, and the implementation of wording for staff to help them identify and review vulnerability at key points in the customer journey. Assistance given to customers should be created to mitigate the harms most likely to be faced by vulnerable customers as detailed above.

Skills and Capability of Staff

There is a clear focus on the skills and capability of frontline staff, with the FCA’s expectation that firms ensure that staff are sufficiently able, trained in techniques and familiar with relevant processes and procedures to identify and support vulnerable consumers. The guidance includes a section covering the recording of vulnerable customers’ data in light of the GDPR and DPA 2018; the FCA expects that frontline staff be sufficiently trained to be able to record this data in a compliant way. MALG is currently raising funds to enable RB Compliance and Chris Fitch to produce guidance in this area.

The findings go further than simply knowing what to do, and the FCA would expect to see staff aware of the needs of the consumer, offering additional support where necessary, and dealing sensitively with each customer. The FCA suggest that firms should also offer practical and emotional support to staff dealing with vulnerable customers.

Product and Service Design

The FCA suggest that firms should consider the positive or negative impacts of a product or service on vulnerable customers, including the features that deliberately or inadvertently exploit vulnerable customers, features designed specifically to deliver positive outcomes for vulnerable customers, and whether the information needs of vulnerable customers are being met so that these customers understand the purpose and risks of the product.

We hope the above article has given you food for thought and that many firms will ensure they are ahead of the curve by taking steps now to improve their processes, the benefit this could have is immeasurable.

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