The FCA has issued guidance on how firms should treat vulnerable customers.
In a PDF entitled ‘Guidance for firms on the fair treatment of vulnerable customers’, the regulator said senior leaders should create and champion a culture to prioritise a fair treatment of vulnerable customers.
Staff should understand that people with mental health issues are more likely to fall into debt, which can in turn worsen their mental health. Meanwhile they should know how perpetrators of domestic abuse can use financial services in their abuse, and recognise how to safely help victims.
Firms should ensure that staff focus on understand and responding to people’s needs, even if they are unusual. For example, if a consumer in arrears mentions that their mental health condition means they find opening letters distressing, firms should focus on how they can communicate using other channels.
The regulator said 27.7 million UK adults have characteristics of vulnerability, such as poor health, experiencing negative life events, low financial resilience or low capability.
Vulnerable people can be at a greater risk of mis-selling, because their ability to make decisions could be impaired.
Nisha Arora, director of consumer & retail policy, said: “Protecting vulnerable consumers remains a key focus for us and given the impact of the Coronavirus pandemic, it is more important than ever that firms get this right.
“The guidance being announced today will help ensure vulnerable consumers are treated fairly and achieve outcomes as good as other consumers.
“While some firms have made significant progress, we want to see all firms across sectors taking steps to understand and respond to the needs of their customers, particularly those who are most vulnerable to harm.
“We also remind customers to tell your providers if you have specific needs – whether that’s due to ill health making it difficult to access a service, or a recent emotional or financial shock that is impacting your finances. Doing this will help firms support you.”
Research from later life mortgage lender more2life found that 39% of advisers have seen an increase in vulnerabilities from their customers in the past 12 months.
What is more, four in five (81%) advisers would like to see more education and resources to help them identify if clients are vulnerable.
Dave Harris, chief executive of more2life, said: “Working with older customers, equity release advisers are acutely aware of how important it is to provide the right support to vulnerable customers. We welcome today’s guidance from the Financial Conduct Authority as it further cements the need to ensure that advice is tailored, appropriate and designed to help vulnerable customers make the right choices for their individual circumstances.
“With this latest guidance, firms now have a clearer understanding of the FCA’s roadmap to achieving good outcomes for vulnerable customers. While only a third of people admit to feeling vulnerable when making a financial decision, 74% would
welcome additional support from their adviser if they felt that they may be potentially vulnerable. These conversations are not always easy but the FCA’s report highlights just how important it is to have them.
“With more advisers identifying vulnerabilities amongst their customer base, the vast majority are keen to understand more about how they can do this and are looking to lenders for support. We need to step up to the plate and provide them with the education, information and support that they need.”
This post has originally been featured in Property Wire.