Ensuring customers have an appropriate degree of protection is central to the FCAs mission. Under the Vulnerable Customer Guidance (FG21/1), the FCA expects vulnerable customers to receive outcomes equal to the treatment of other customers. Treatment must be consistent and fair across the end-to-end product and customer lifecycle.

The FCA’s focus on vulnerability continues to sharpen. In March 2024, they commenced a two-stage review into how firms are supporting vulnerable customers. Last month Graeme Reynolds (Director of Consumers and Competition) outlined that some firms have failed to think about vulnerability proactively and need to act imminently. With findings from the review due to be shared by the end of 2024, this couldn’t be more clear.

Under Consumer Duty, the FCA expects firms to:

• ensure colleagues have the right skills and capability to recognise and respond to the needs of vulnerable customers
• understand and respond to customer needs throughout product design, flexible customer service and communications
• monitor whether they are responding to the needs of customers with characteristics of vulnerability, making improvements where this is not happening.

Challenges faced by firms

Based on our research and working with firms across the market, firms face a number of challenges in supporting vulnerable customers, including:

• Identification difficulties: Vulnerable customers may not self-identify, and hidden vulnerabilities can be challenging to recognise.
• Communication barriers: Complex language, inaccessible formats, and digital exclusion can hinder communication and service access.
• Inadequate staff training: Lack of awareness and inconsistent handling can lead to inappropriate responses and missed signs of vulnerability.
• Insufficiently tailored products and services: Rigid processes, unsuitable products, and inflexible payment options can exacerbate customer difficulties.
• Data privacy concerns: Balancing requirements for customer information with data privacy.
• Operational challenges: Resource constraints, lack of coordination, and inadequate monitoring.

Overcoming challenges

To overcome these challenges, ensuring vulnerable customers receive meaningful support, and good outcomes, consideration should be given to:

• Robust Vulnerable Customer Operating Model: Encompassing identification, customer interaction, product design, governance, and continuous improvement.
• Staff training: Equipping colleagues with the skills to effectively recognise and respond to customer vulnerabilities.
• Inclusive products and services: Adapting products, services, and communication methods to meet the diverse needs of vulnerable customers.
• Technology: Utilising analytics, machine learning, AI, and digital accessibility tools to enhance identification, communication, and support delivery.

Customer-centric approach: Prioritising fair treatment of vulnerable customers through dedicated support services, accessible communication channels, and tailored solutions.

Effectively supporting vulnerable customers can enhance reputation, drive business growth and innovation, improve risk management and foster a purpose-driven culture.

For more information, download our ‘Supporting Customers in Vulnerable Circumstances’ white paper.