The Financial Conduct Authority has published guidance for firms on the fair treatment of vulnerable customers and regulated members are being encouraged to check it to ensure that they have the right processes in place to ensure best practice.
The Guidance sets out the actions that firms should take to treat vulnerable customers fairly and provides examples of how firms can put them into place. It also includes case studies showing good and bad practice. A short summary of the guidance has also been published on the FCA website.
It is important for all firms to understand the needs of vulnerable customers and make any changes required to meet the standards set by the FCA’s existing Principles for Businesses.
The FCA defines a vulnerable customer as somebody who, due to their personal circumstances, is especially susceptible to harm - particularly when a firm is not acting with appropriate levels of care. Vulnerability is viewed as a spectrum of risk. All customers are at risk of becoming vulnerable, but this risk is increased by having characteristics of vulnerability. These could be poor health, such as cognitive impairment, life events such as new caring responsibilities, low resilience to cope with financial or emotional shocks and low capability, such as poor literacy or numeracy skills.
Not all customers who have these characteristics will be vulnerable. But they may be more likely to have additional or different needs which, if firms do not meet them, could limit their ability to make decisions or to represent their own interests. The level of care that is appropriate for these consumers may be different from that for others.
Members can find out more by attending the BVRLA’s Compliant selling: Treating customers fairly remote learning course, which is next taking place on 15 March.