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Back in 2021, the FCA issued its final guidance on the fair treatment of vulnerable customers (FG21/1), highlighting key actions firms should undertake to provide appropriate support:

• Understand the needs of their target market customer base.
• Ensure their staff have the right skills and capability to recognise and respond to the needs of vulnerable customers.
• Respond to customer needs throughout product design, flexible customer service provision and communications.
• Monitor and assess whether they are meeting and responding to the needs of customers with characteristics of vulnerability and make improvements where this is not happening.

As a reminder, the FCA guidance defines a vulnerable customer as someone who is particularly susceptible to harm due to personal circumstances, especially if the firm does not act with appropriate care.

The FCA’s vulnerable customer guidance (FG21/1) is extensive, shining a light on how important the FCA feel this area of the Duty is and the care and attention that firms should be giving to this. In addition to this, ‘vulnerable’ appears a further 110 times in the Final non-handbook guidance on the Consumer Duty (FG22/5).

We all have the propensity to become vulnerable at some point in our lives. Research from the FCA published in June 2023 ahead of the first Consumer Duty deadline found that over 52% of UK adults exhibit active characteristics of vulnerability. Regardless of any guidance from the FCA, this statistic alone should make us all focus on the need for well constructed customer journeys and ways of working which continue to support and enable clients who are vulnerable.

Whilst firms are likely to have taken steps to assess and improve their process for dealing with vulnerable customers ahead of the implementation of Consumer Duty last year, it’s vital that this process wasn’t a ‘one and done’. The Duty requires that processes are embedded and ongoing, with robust reporting in place to evidence key deliverables.

It’s important to remember that whilst consumers might display vulnerable characteristics and therefore be at a greater risk of harm, ‘this does not mean that they will suffer harm, particularly if firms act with appropriate levels of care.’ (FG21/1 2.25)

Across the industry, our approach to vulnerability continues to mature and strengthen. There are some practical things that firms can consider as part of any annual reviews, or consumer duty audits to deliver ‘appropriate levels of care’:

Ensure appropriate consent is obtained

It might be the case that data relating to a client’s vulnerability constitutes ‘special category’ data under GDPR. If this is the case, explicit consent is required from the client before a firm can process their data and provide the support required.

Firms might find that having template wording, or a standard form enables this consent to be provided whilst minimising the risk to clients or the information required from them. It goes without saying that any communication should be clear and not misleading. By having this template wording in their toolkit when dealing with various providers, advisers can streamline the process of making the appropriate people aware of customer vulnerability and better manage the support solutions firms put in place for their clients. 

"The FCA guidance defines a vulnerable customer as someone who is particularly susceptible to harm due to personal circumstances, especially if the firm does not act with appropriate care."

Empower and involve your employees

Ultimately, it’s your people) that are going to be engaging with vulnerable clients. Firms need to make sure that their people understand the Consumer Duty regulations and are able to identify and support their vulnerable customers. Of course we would all expect our people to provide good support anyway, but this is an area where training really makes a difference.

One of the key aspects of offering support to vulnerable clients is ensuring they only need to disclose their circumstances to firms once. This requires having well-trained and empowered staff available to identify, document, and respond to any disclosures of vulnerability at the earliest opportunity. Maintaining those records is also key, ensuring the support is not timeboxed.

Employ flexibility

Flexible customer journeys and service can really improve the experience for those living with vulnerabilities. “Unresponsive or inflexible customer service can exacerbate difficulties in accessing services. Difficulties with access can lead to disengagement, exclusion, mistrust or even risk of scams as customers may instead rely on informal access methods.” (FG21/1 2.24B).

Some clients, due to age, poor vision or capability may struggle with online processes and those with limited or no internet access may be disadvantaged by online only services.

Advisers should consider including ‘positive friction’ in your customer journeys to give customers time and space to think about their financial objectives and ask questions if they get stuck. Positive friction is a term used to describe experiences where the consumer has been slowed down on their buying journey but find it to be a positive experience.

Monitor, evidence and evaluate your outcomes

Reporting is going to look different for each firm, dependent on what you feel is important to track.

The reality is that each firm will interpret elements of the Consumer Duty regulations in different ways, and naturally this will lead to differing reporting and governance structures.

The key takeaway is that monitoring and evaluating outcomes for vulnerable customers is going to span numerous touchpoints across a firm. From customer service, to compliance, to marketing and beyond.

Therefore, at a minimum, firms should have a clear and robust annual review process for documentation to ensure ongoing compliance with the duty, ensuring that appropriate versions/adjustments are made for those customers displaying vulnerable characteristics.

Vulnerability can be temporary, permanent, or intermittent, so regular literature, process and governance reviews are essential for ongoing compliance and tracking of outcomes.

Offer suitable reasonable adjustments

There isn’t a blanket approach that a firm can take when it comes to reasonable adjustments. For some clients, they might require communications to be in large print, or braille. For others, they might need interpreters, or in person meetings. The critical consideration for firms here is that each client is different, and each vulnerability has the potential to impact people in different ways and at different times. Something as simple as understanding a customer’s channel of choice will make a huge difference in the outcomes they experience.

The reasonable adjustments that firms offer should be under constant review and evolution, considering feedback from customers and firms’ outcomes.

Be proactive in offering support

The FCA’s final guidance (FG21/1) requires firms to be ‘proactive in offering support’, allowing customers to inform them of any additional needs that they might have.

There are several ways in which firms can be proactive in offering support. From dedicated webpages, signposting, calling out options available in literature or communications, to offering adjustments like face-to-face meetings as opposed to solely dealing over the phone or in writing – there’s never too many ways in which you can shout about all the good things you can do to support vulnerable customers.

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