YOUR COMPLIANCE MATTERS – Consumer Duty – Vulnerable Customers

Relevance: All firms 

Action required: Review your own performance against the FCA review of Consumer Duty issues relating to Vulnerable Customers and consider any additional action that you may want to take.

The FCA has published its review into firm’s treatment of customers in vulnerable circumstances.

To quote ‘Meeting the needs of consumers in vulnerable circumstances can be hard to get right. Our review shows that some firms are making a real difference by supporting consumers and responding flexibly to meet often complex and highly individual needs, which helps to build trust. But most firms can do more, particularly when designing products and services, and monitoring and taking action where vulnerable customers are experiencing worse outcomes than other customers.

Alongside the review we’ve published consumer research and good and poor practice examples to help firms deliver good outcomes for customers in vulnerable circumstances and to provide the extra insight industry is asking for’.

You can read the review here https://www.fca.org.uk/publications/multi-firm-reviews/firms-treatment-vulnerable-customers

The FCA feedback on good, and poor practice in this area is here https://www.fca.org.uk/publications/good-and-poor-practice/delivering-vulnerable-customers

As the FCA state ‘There is no one-size-fits-all approach. The approach that firms take will differ according to their business model, size and customer base’.

To assist you, we have summarised the feedback on good, and poor, practice below.

‘Areas of good practice

Effective use of data to monitor outcomes

A small number of firms used data effectively to identify where customers in vulnerable circumstances were experiencing worse outcomes than others. 

Offering flexible and tailored consumer support

We saw examples of firms delivering flexible and tailored support, strengthened by training frontline staff on how to support customers with characteristics of vulnerability.

Clear and timely communications

We saw firms take steps to review and improve the clarity of their messages to customers, tailor communications, and provide these in a timely manner to make sure customers understood product information. 

Incorporating consumers’ experiences into product and service development processes

Some firms incorporated feedback from lived experience panels and focus groups into their development processes, and considered how customers in vulnerable circumstances used their products as part of product reviews processes.

Areas for improvement

Ineffective outcomes monitoring

Most firms in our multi-firm work into outcomes monitoring were unable to show how they effectively monitor and act on outcomes for customers in vulnerable circumstances. This includes:

- Not being clear on what good outcomes look like or having clear ways of measuring them.

- Not escalating issues or making changes where needed.

Failure to give appropriate support. Some firms failed to:

- Appropriately support staff in identifying customers in vulnerable circumstances.

- Encourage customer disclosure.

- Provide support promptly and with an appropriate level of care. 

Failure to communicate clearly to meet the needs of customers in vulnerable circumstances

We saw examples of firms not providing appropriate or accessible channels to customers in vulnerable circumstances, and a lack of testing of consumer understanding. 

Lack of tailored training and embedding consumers’ needs into product and service design

Most firms we engaged with could not show us how they had embedded the needs of customers in vulnerable circumstances into their product and service design processes. 

We also saw a lack of training on vulnerability for product and design staff.’

Summary

As always, the FCA expects firms to take an approach which is proportionate to the size, and complexity, of their business and the feedback provided should be used to inform your own approach to this issue.