• The FCA has published guidance on how financial firms should treat vulnerable customers in the wake of Coronavirus (https://www.fca.org.uk/news/press-releases/fca-launches-guidance-firms-fair-treatment-vulnerable-customers)
• The regulator’s latest Financial Lives Survey shows 27.7 million adults in the UK have characteristics of vulnerability such as poor health, experiencing negative life events, low financial resilience or low capability (https://www.fca.org.uk/publications/research/financial-lives-2020-survey-impact-coronavirus)
• This figure surged by 15% - or by 3.7 million people – between March and October 2020
• While vulnerability can be transient and often difficult to identify, firms must ensure processes are in place so all customers can be treated fairly
Tom Selby, senior analyst at AJ Bell, comments:
“Given the devastating impact Coronavirus and the national lockdown has had on people’s lives, it is no surprise the number of vulnerable or potentially vulnerable people in the UK has surged.
“In fact, over half the UK population – almost 28 million people – now demonstrate characteristics of vulnerability. This is truly shocking and while we now have a roadmap out of lockdown, millions will face job and income insecurity in 2021 and beyond.
“Given this backdrop, it is positive to see the FCA re-emphasising the vital role financial services firms can play in identifying people who may be vulnerable today or at risk of being vulnerable in the future.
“Vulnerability, by its nature, can be transient and difficult to spot, so ensuring fair treatment of vulnerable and potentially vulnerable customers is at the heart of each firm’s culture is the right approach.”
Understanding where vulnerability can strike
“Historically there has been a common misconception that vulnerability is just about older people or those suffering from diagnosed illnesses. The reality is every single person will likely, at some stage in their lives, be vulnerable.
“The death of a loved one – something far too many have had to endure during this pandemic - can leave those left behind in an acutely vulnerable emotional state. Those facing income insecurity can also face severe vulnerability, particularly if they are struggling to make ends meet and fall into a debt spiral.
“Mental illness can equally strike out of nowhere and last for days, weeks, months or even years, with suffering often kept secret even from close family and friends.
“Attention on this important topic is long overdue and all involved in delivering financial services have a huge role to play in ensuring vulnerable and potentially vulnerable customers are identified and protected as much as possible.”