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Finalised FCA Guidance on the Fair Treatment of Vulnerable Customers

As the industry begins to look to a future beyond the pandemic, maintaining a focus on the effects on vulnerable consumers becomes even more important. The FCA has recently signalled that it is very likely to maintain a strong focus on firms’ treatment of vulnerable customers over the next few years. There has been some recent discussion within the media around the real-terms impact of the pandemic on UK consumers as a whole, with an argument that some consumers will actually be ‘better off’ post-pandemic, due to reduced spending. However, the number of customers that will fall into the FCA’s definition of vulnerability is likely to have risen during the pandemic, not decreased, as the length and impact of the pandemic means that those the FCA consider to have characteristics of vulnerability have increased by around seven percentage points in just under a year.

Financial Services Regulation Round-Up: April 2021




The recently published finalised guidance on the fair treatment of customers will continue to apply in a post-pandemic world.

The guidance sets out six key areas that firms should focus on to help vulnerable customers receive the same outcomes as customers who are not considered vulnerable:

  1. Understanding customers’ needs – who makes up the firm’s customer base, understanding the impact of likely vulnerabilities on these customers, and how this might affect their customer experience and outcomes

  2. Skills and capability – embedding fair treatment across the workforce so all staff understand how their role fits with the firm’s vulnerability framework, and ensuring that frontline staff have the skills and capability to recognise and respond to vulnerability

  3. Monitoring and evaluation – implementing processes to find where the needs of vulnerable customers have not been met, and regular review of management information

  4. Product and service design – from the very beginning of the design process, thinking about the impacts on vulnerable customers to ensure their needs are met

  5. Customer service – setting up systems and processes so that vulnerable customers are supported, signs of vulnerability are spotted early on, and appropriate customer service is delivered

  6. Communications – should be understandable for all consumers and sent in a format that meets their needs.

Supporting vulnerable customers isn’t only about complying with regulator expectations, and that is what comes across within the guidance document. What the FCA’s expectations around the treatment of vulnerable people does is show how serious the regulator is about embedding a deep sense of ethics and ‘doing the right thing’ within financial services firms. How this works in practice will differ between business types and size of firm, and customer base will have an impact as well.

Smaller firms, especially, can focus on the key areas the FCA have identified, and within those, on the most impactful elements first. Ensuring that frontline staff have the skills to recognise and identify when someone might be vulnerable can have a major impact on the firm’s fair treatment of vulnerable customers – it is only once they have been identified that they can be offered support. It is also critical to firms having a good understanding around how many of their customer base are likely to be vulnerable.

In part, this is down to building staff capability through training and practice. Vulnerability is most usually identified through indicators – or verbal or physiological cues given by the customer – which are sometimes referred to as ‘red flags’. Some vulnerabilities might be more obvious than others. A hearing impairment will likely be more apparent to a member of staff speaking to someone on the telephone. Conversely, someone who has experienced difficulties because of a gambling problem will be less obvious. Both issues are likely to mean that the customer would be considered vulnerable by the FCA, and both customers can be supported with the right adjustments or support options – but frontline staff must know about the circumstances to be able to do that.

It can be a fraught area – too many people it feels impolite to ask questions that in another setting might be considered prying into someone’s personal life. The right training can help staff understand why it is necessary and show what an enormous positive impact the right support can have, as well as taking staff through steps and techniques they can use to make the conversation a bit easier.

Once red flags have been identified, it is down to the agent to begin the conversation with the customer, and this involves letting them know why information about their circumstances might be important, what the firm will do with it, and how the firm can help. This conversation can be difficult, especially where the customer might not understand that there is support available. So training on simple communication techniques that can be used to help customers understand what can be done, what the firm needs to know to offer that help, and most importantly, that the information will not be used against them, is a great first step to help meet the FCA’s expectations.

We offer a dedicated online training course on the fair treatment of vulnerable customers. Priced at just £15 per user, the course is accessible at the delegate’s convenience and provides a certificate upon successful completion, allowing firms to track and record each user’s progress.

For large groups, we can offer a simplified enrolment service and pricing, simply email


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