The Consumer Duty came into effect two years ago. Vulnerability is at the heart of Consumer Duty, integral to the obligations and outcomes and underpinning the standards expected of firms. Firms’ obligations to vulnerable customers didn’t start in July 2023 – there were already existing guidance and legal requirements. But Consumer Duty puts them front and centre.
In 2021 the FCA made clear that vulnerability can be complex and changing. Most people have characteristics of vulnerability, or experience life events that can drive vulnerability, at some point in their lives. It’s important to whether a customer is vulnerable – that they are especially susceptible to harm, particularly if the firm does not act with appropriate levels of care.
Firms should have policies and procedures in place to support vulnerable customers. But at the Financial Ombudsman Service, we know it’s not just about having policies and procedures. It’s about equipping and empowering staff with the tools to recognise when they need to do something more, or something different, to help a vulnerable customer meet their objectives or avoid harm. That includes pro-actively identifying customers who might need extra help – not just waiting to be asked.
We’ve seen many examples of great practice where firms have tailored their actions to meet the needs of individual customers. From being alert to fraud and protecting them from borrowing to pay scammers, to giving clear and detailed explanations when customers are confused about how their products work.
However, we’ve also seen examples of where we didn’t think firms did enough. For example, when asked for a reasonable adjustment it can’t provide, firms should look at alternatives rather than just saying no. Where customers are being supported by third parties, such as attorneys, firms should make sure there aren’t unnecessary barriers that make it harder for the attorney to manage the account than it would have been for the customer. And the Consumer Duty makes clear that when it comes to providing information the when is as important as the what – empowering customers to make informed decisions.
Consumer Duty reminds us that great customer service involves really listening to customers, helping them meet their objectives and tailoring what you do to support their needs where necessary – especially where they may be vulnerable. Fairness, and treating customers fairly, is of utmost importance.
