FCA Issues draft new guidance regarding the fair treatment of vulnerable customers.

FCA has issued draft guidance on the fair treatment of vulnerable customers for consultation. The consultation period ends on 30th September. This guidance applies to all retail sectors and will be of particular relevance to consumer credit lenders.

FCA expects firms to ensure that their employees have the relevant knowledge and skills to treat vulnerable customers fairly and to have adequate processes and controls to mitigate the risk of harm to vulnerable customers. Senior leaders in firms should ensure that their firms embed the fair treatment of vulnerable customers into their policies and processes throughout the whole customer journey. The guidance sets out ways that firms can comply with their obligations but it is for each firm to decide what is appropriate for their business.

A vulnerable customer is “someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care.”


FCA has identified 4 key drivers which may increase the risk of vulnerability. These are:

  • Health – health conditions or illnesses that affect the ability to carry out day-to-day tasks.
  • Life events – major life events such as bereavement, job loss or relationship breakdown.
  • Resilience – low ability to withstand financial or emotional shocks.
  • Capability – low knowledge of financial matters or low confidence in managing money (financial capability). Low capability in other relevant areas such as literacy, or digital skills.

FCA has identified that just under half of UK adults display one or more of these characteristics and that this number could now be higher as a result of the current pandemic.

To safeguard vulnerable customers firms must understand their needs, ensure staff have appropriate skills, consider all elements of products and services, and monitor the situation on an on-going basis.


1. Understanding the needs of vulnerable customers:

  • understand the nature and scale of characteristics of vulnerability present in their target market and customer base.
  • understand the impact of vulnerability on the needs of consumers in their target market and customer base, and how this might affect the consumer experience and outcomes.

2. Ensuring staff have appropriate skills and capabilities to address the needs of vulnerable customers:

  • embed the fair treatment of vulnerable consumers across the workforce. All relevant staff should understand how their role impacts the fair treatment of vulnerable consumers.
  • ensure frontline staff have the necessary skills and capability to recognise and respond to a range of characteristics of vulnerability.
  • offer practical and emotional support to frontline staff dealing with vulnerable consumers.

3. Taking practical action in product service and design, customer service and customer communications. 

  • consider the potential positive and negative impacts of a product or service on vulnerable consumers and design products and services to avoid potential negative impacts.
  • take vulnerable consumers into account at all stages of the product and service design process (idea generation, development, testing, launch and review) to ensure products and services meet their needs.
  • set up systems and processes in a way that will support and enable vulnerable consumers to disclose their needs. Firms should be able to spot signs of vulnerability.
  • deliver appropriate customer service that responds flexibly to the needs of vulnerable consumers.
  • make consumers aware of support available to them including options, where relevant, for third party representation and specialist support services.
  • put in place systems and processes that support the delivery of good customer service, including systems that enable the recording of and access to information about consumers’ needs
  • ensure all communications and information about products and services are understandable for consumers in their target market and customer base.
  • consider how they communicate with vulnerable consumers, taking into consideration their needs. Where possible, they should offer multiple channels so vulnerable consumers have a choice

4. Monitoring and evaluating on an ongoing basis. 

  • implement appropriate processes to evaluate where the needs of vulnerable consumers are not met, so that they can make improvements.
  • produce and regularly review management information, appropriate to the nature of their business, regarding the outcomes they are delivering for vulnerable consumers.


If you would like further information you can find the Consultation Paper here: https://www.fca.org.uk/publication/guidance-consultation/gc20-03.pdf



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