FCA targets firm culture in vulnerable customers guidance

Tom Selby
23 July 2019

•        The FCA has today published guidance designed to help firms develop and improve the way they approach vulnerable and potentially vulnerable customers (https://www.fca.org.uk/publication/guidance-consultation/gc19-03.pdf)
•        Half of UK adults (25.6 million people) display one or more characteristics of being potentially vulnerable (Source: FCA Financial Lives survey, 2017)
•        Regulator sets out four key drivers of vulnerability: health; life events; resilience; and capability
•        Sharing industry best practice key to improving consumer outcomes

Tom Selby, senior analyst at AJ Bell, comments: 

“Ensuring vulnerable and potentially vulnerable customers are treated appropriately is one of the biggest challenges facing the FCA and the wider financial services industry. 
“There is a common misconception that vulnerability is just about older people or those suffering from diagnosed illnesses. The reality is every single person will, at some stage in their lives, be vulnerable to one degree or another. 
“The death of a loved one, for example, can leave those left behind in an acutely vulnerable emotional state. New parents can suffer significant mental issues in the wake of childbirth, with some falling into deep depression. 
“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. Among older people, dementia is likely to become an increasingly significant area of potentially severe vulnerability, with Alzheimer’s UK anticipating the number of sufferers will rise to 1 million by 2025.
“The complex, deeply personal and often transient nature of vulnerability can make it difficult to spot and respond to. The FCA is therefore right to focus on ensuring appropriate responses to vulnerability are embedded in firms’ cultures. 
“This is not a problem that can be solved through rule changes – instead appropriate responses need to be woven into the fabric of all financial services firms, including pension providers. 
“Firms need to be constantly reviewing and updating their approaches, in line with industry best practice. By setting out positive case studies in its guidance the FCA has made an important contribution to this.”

How AJ Bell protects vulnerable customers

•        All staff complete an e-learning module on potentially vulnerable customers – who they could be, how to spot the signs and what to do once a vulnerable customer is identified.
•        Vulnerable subject matter experts across the business in customer-facing roles have received classroom training regarding the identification and treatment of potentially vulnerable customers.
•        Company websites ask customers to contact us should we need to know anything about their current circumstances which can help us to assist them more effectively.
•        Where a customer is identified as vulnerable for whatever reason, a flag is placed on our system so the individual is spoken to by one of our trained experts. This is designed to ensure their specific needs don’t need to be repeated each time they contact us.
•        Those in receipt of death benefits, or when Junior SIPP or ISA accounts are converted into ‘adult’ accounts, are automatically flagged as potentially vulnerable.

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