Vulnerable Customers

What Does the FCA Say. 

‘Our Principles for Businesses require firms to treat customers fairly, and we expect firms to exercise particular care with vulnerable consumers. 

When consumers are in vulnerable circumstances, it may affect the way they engage with financial services. Vulnerable consumers may be significantly less able to represent their own interests, they may have different needs and may have more behavioural biases that negatively affect their decision making.

The effect of non-standard needs, together with behavioural biases, could be exacerbated by how firms behave.

Protecting the interests of consumers in vulnerable circumstances is a key focus for us.’

FCA Expectations and What it Means For You. 

The FCA defines a vulnerable customer as someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.

Anyone can find themselves in vulnerable circumstances at any time and there are 4 key drivers of vulnerability in financial services:

• Health
• Life events
• Capability
• Resilience

Vulnerable customers must experience outcomes as good as those for other customers, and receive consistently fair treatment. To make sure this happens, firms must be able to demonstrate how their business model, the actions they take, and their culture ensure the fair treatment of all customers.  

Vulnerable customers may be more likely to have additional or different needs which, if not met by firms, could limit their ability to make decisions or to represent their own interests. The level of care that is appropriate for these consumers may be different from that for others and firms can prevent harm to these customers’ by taking appropriate action to respond effectively to their needs.

The FCA has published guidance which highlights the actions firms should take to understand the needs of vulnerable customers and ensure they are treated fairly. The guidance can be found here.

Actions to Take.

• Understand the needs of their target market/customer base.
• Ensure staff can recognise and respond to the needs of vulnerable customers.
• Respond to customer needs through customer service and product design and communications.
• Monitor whether you are meeting the needs of vulnerable customers and take appropriate action.
• Monitor how you are treating vulnerable customers and be accountable.
• Firms can expect to be asked to demonstrate how their business model, their culture, and the actions they have taken to ensure the fair treatment of all customers, including vulnerable customers.

Things to Note About Capturing Information In FAMOS.

• The functionality in FAMOS is to allow you to easily notify us if a customer voluntarily informs you that they may need additional support whether that is at this initial stage or for the life of their agreement.
• Please refer to your own company policy and procedure on Vulnerable Customers. There is no expectation for you to directly ask each customer whether they have a vulnerability.
• If you do record such detail by using the field, then you must request explicit consent from the customer to do this. Please refer to your own company policies and the Best Practice Guide for a Compliant Sales Process for more information.
• The options available within support field are those suggested by the FCA to allow not only you but us to provide the correct level of support.
• If you suspect a customer has a vulnerability but do not want to ask directly or the customer doesn’t volunteer the information, please refer to your own processes in the first instance, then contact our underwriting for further assistance.
• As a reminder, please refer to the FAMOS video available here and the additional video available below for more information.
• Further Consumer Duty resources are available here.