On Mar. 7, UK FCA issued findings on treatment of vulnerable clients.
FCA issued report on findings of its review of how firms are supporting customers in vulnerable circumstances and whether its existing guidance is still appropriate.
FCA gathered data to understand: actions firms have taken to understand and respond to the needs of customers in vulnerable circumstances; outcomes received by customers in vulnerable circumstances; stakeholders' view of the FCA's Guidance.
Included consumer research, analysis of Financial Lives survey data, survey of 725 firms, research on outcomes monitoring and on power of attorney processes in banks.
Findings
Consumer research finds that vulnerable customers more likely to report a negative experience with financial services firms when compared to non-vulnerable customers.
Many firms have taken positive action and made good progress in supporting customers in vulnerable circumstances, evidenced in regulator's consumer research.
Clear that Consumer Duty has driven a renewed focus among firms on delivering good outcomes for customers in vulnerable circumstances, but still room to improve.
Areas of good practice included: effective use of data to monitor outcomes, pinpoint if customers in vulnerable circumstances are experiencing worst outcomes than others.
Offering flexible and tailored support; firms taking steps to review and improve clarity of their messages to customers, tailor communications, provide in a timely manner.
Also incorporating consumers' experiences into product and service development.
Areas for improvement include: ineffective outcomes monitoring; failure to give appropriate support, including not encouraging customers to disclose vulnerabilities.
Failure to give appropriate support or accessible channels to customers in vulnerable circumstances, and a lack of testing of consumer understanding of communications.
Lack of tailored training and embedding consumers' needs into product and service design, accompanied by lack of training on vulnerability for product and design staff.
FCA gives examples, sets out prompts for firms on how to improve in this area.
Next Steps
On the basis of the review, FCA finds that the Guidance remains useful and important under Consumer Duty, so is not revising it or introducing new requirements for firms.
But has published case study examples of good practice and areas for improvement.
Regulator encourages firms to make use of these examples, and will continue to take account of outcomes for vulnerable customers across its Consumer Duty work.
Will also continue to engage with industry to support continuous improvement, particularly in areas that firms find more challenging re vulnerable customers.
