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FCA publishes final guidance on vulnerable customers

The Financial Conduct Authority (FCA) today published its final guidance on its expectations for firms on the fair treatment of vulnerable customers.

The guidance aims to improve the way firms treat vulnerable customers to ensure they achieve the same outcomes as non-vulnerable clients.

The regulator will use the guidance to hold firms to account for their treatment of vulnerable customers. Firms can expect to be asked to demonstrate how their business model, the actions they have taken and their culture ensure the fair treatment of all customers, including vulnerable customers.

The regulator said vulnerable characteristics may limit a client’s ability to make reasonable decisions or put them at greater risk of mis-selling.

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The regulator said that firms should understand what harms their customers are likely to be vulnerable to and ensure that customers in vulnerable circumstances can receive the same fair treatment and outcomes as other customers. It added that this needs to happen through the whole customer journey.

Nisha Arora, director of consumer & retail policy at the FCA, said: “Protecting vulnerable consumers remains a key focus for us and given the impact of the Coronavirus pandemic, it is more important than ever that firms get this right. The guidance being announced today will help ensure vulnerable consumers are treated fairly and achieve outcomes as good as other consumers.

“While some firms have made significant progress, we want to see all firms across sectors taking steps to understand and respond to the needs of their customers, particularly those who are most vulnerable to harm.”

According to the FCA’s Financial Lives research, 27.7m adults in the UK have characteristics of vulnerability such as poor health, experiencing negative life events, low financial resilience or low capability.

Responding to the guidance, Keith Richards, chief executive of the Personal Finance Society, said the FCA is “crystal clear” in  their expectation that firms need to be able to demonstrate how their business model, the actions they have taken and their culture ensure the fair treatment of all customers, including clients in vulnerable circumstances.

He said: “At the heart of this sits the principles of fair treatment and inclusion for all – something the Personal Finance Society and Financial Vulnerability Taskforce members are passionate about, due to our remit to secure and justify the public’s trust in our profession.”

The Personal Finance Society launched their independent Financial Vulnerability Taskforce in January with the aim of supporting the financial advice profession to better recognise and address the various forms of consumer vulnerability, improve client outcomes and increase access to financial advice.

• Read the Finalised Guidance (PDF)


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