Ben Stafford, Head of Public Affairs, JUST
Dealing with vulnerable customers – the industry response
Though most of us should enjoy longer lives than previous generations, there’s no guarantee that our later years will be free from challenge. Ill health, bereavement, loneliness and cognitive decline are among the factors that can make even the hardiest people vulnerable in later life.
The FCA first set out its expectations of firms’ handling of vulnerable consumers in a 2015 report that included the regulator’s chosen definition of a vulnerable consumer – “someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care”.
Indicating the scale of the issue, the report estimated that 50% of adults show one or more characteristics of potential vulnerability. These characteristics include low financial resilience, the impact of divorce or bereavement, low financial capability and/or health issues, which can all affect consumers’ ability to engage with firms.
Just recently published a ground-breaking report on the vulnerability agenda, looking at how firms are getting to grips with these complex issues. The report – Dealing with vulnerable customers: The industry response – draws on insights from firms across the UK life and pensions, equity release and advisory markets and one trade association.
The research confirms that recognising vulnerability and developing suitable processes and responses can be challenging. Somewhat perversely, the further firms are along the journey of implementing a vulnerability strategy, the more they realise that this is a much bigger issue than they had anticipated. Firms are at different stages of implementing their vulnerability strategies, with some in the “early stages” and “still learning” phases to those confident that they are “most of the way there”.
Firms strongly agreed that dealing effectively with vulnerable customers will continue to be a high priority for the FCA, and the FCA has confirmed it will be publishing guidance to firms this year. Publishing guidance is important because in addition to its usefulness in helping firms understand what good looks like, it also provides the framework for future supervisory activity. In the meantime our report (here) offers useful insights on firms’ engagement with this important agenda.
