We have written a few posts in recent months exploring the cost-of-living crisis, and the impact it is having on different consumers. Money worries continue to get a lot of coverage in the media, but we are also told about the recovering economic health of the country.

It is difficult to assess how individuals are coping as it is dependent on their own unique circumstances. That said many are still struggling or could easily be affected by an unexpected shock to their income.

Though financial difficulty is not the same as vulnerability, the two are inextricably linked, especially in the eyes of the regulator. The FCA has the issue of vulnerability firmly in its sights and it wants to ensure regulated firms are doing the same.

Of course, someone could be considered vulnerable for nothing to do with their financial situation – they may have a disability or have suffered a significant life event. Firms should know they need to consider all possible angles.

Only last week the regulator announced a review of firms’ treatment of customers in vulnerable circumstances. In its 2022 Financial Lives Survey, the FCA found that over 27M adults in the UK showed at least one characteristic of vulnerability. That is a significant proportion of the population. It is easy to see why the regulator is maintaining such a focus on vulnerable customers.

The FCA’s review will look at firms’ understanding of consumer needs, the skills and capability of staff, product and service design, communications, and customer service, and whether these support the fair treatment of customers in vulnerable circumstances.

It will also look at the outcomes consumers in vulnerable circumstances receive and whether they’re as good as the outcomes of other consumers.  As part of the review, the FCA will conduct consumer research as well as gathering information from firms and consumer representatives to make this assessment. Firms can be expected to be contacted and be asked to evidence their policies and procedures.

This week a “Dear CEO letter” was also issued by the FCA to much of the consumer credit sector further underlining the need to consider vulnerable customers. The letter covered the entire lending cycle but urged lenders to lend responsibly and sustainably. They pointed to the fact the vulnerability is increasing while financial resilience decreases.

With that in mind firms should ensure they are following the regulator’s guidance on fair treatment of vulnerable consumers. The introduction of the Consumer Duty should also help firms assess how they are dealing with vulnerable customers. It is about being proactive, stepping in when you can to help and support the customer.

“Doing the right thing” for the customer might sound cheesy but a lot of this is common sense. Are you treating the customer like you would want your family to be treated? Are staff alert to the signs of vulnerability? Do you have systems in place to support customers that need it?

These are the sort of questions firms should be asking themselves and it is important to remember this is an ever-evolving process. Does your MI or data help to spot vulnerability or identify new processes? There is always room for improvement.