Our work on the fair treatment of vulnerable customers, including why vulnerability matters, how it affects your firm, and our guidance on supporting customers in vulnerable circumstances.
Why vulnerability matters
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 impact their decision making.
The impact of non-standard needs, together with behavioural biases, could be further exacerbated by how firms behave.
Protecting the interests of vulnerable consumers is a key focus for us. Our Business Plan for 2020/21 states that we will focus on making sure that the most vulnerable are protected.
The 4 external priorities in the Business Plan (enabling effective consumer investment decisions, ensuring consumer credit markets work well, making payments safe and accessible and delivering fair value in a digital age) all require us to understand and take strong action to address issues faced by vulnerable consumers in these areas.
We want vulnerable consumers to experience outcomes as good as those for other consumers, and receive consistently fair treatment across the firms and sectors we regulate.
To make sure this happens, firms in all sectors need to pay attention to the fair treatment of vulnerable consumers across all products and services.
Firms should be able to demonstrate how their business model, the actions they take, and their culture ensures the fair treatment of all customers.
In February 2021, following 2 consultations, we published finalised guidance on the fair treatment of vulnerable customers. Our Guidance sets out the actions firms should take to treat vulnerable customers fairly. It also highlights examples of how they can put these actions into practice and includes case studies showing good and bad practice.
We have undertaken significant work to help firms understand the issues and act appropriately to ensure the fair treatment of vulnerable consumers.
Our policy development has been supported by our consumer research, including our Financial Lives Survey.
Find out more about the background to our approach to protecting vulnerable consumers below.
- Occasional Paper on vulnerability - 2015
- Approach to Consumers - 2018
- Vulnerability Guidance
- Our research
Our Occasional Paper (pdf) aimed to increase understanding and discussion around vulnerability. The paper also included practical resources to help firms to develop and implement a vulnerability strategy.
The paper and accompanying research showed examples of good practice in the way some firms treat consumers in vulnerable circumstances. However, it also highlighted instances in which vulnerable consumers had not received fair treatment from firms.
In Our Approach to Consumers (pdf), we explained our vision for well-functioning markets for consumers, and the conditions we want to see to achieve this.
We committed to consult further on guidance for firms on the treatment of vulnerable consumers.
Following 2 consultations (in July 2019 and July 2020), in February 2021 we published a feedback statement and finalised guidance. The consultations sought views on the aims and content of the Guidance and helped us to develop our approach.
- Vulnerability exposed: The consumer experience of vulnerability in financial services (pdf)
- Financial Lives: The experiences of vulnerable consumers (pdf)
- Financial Lives 2020 survey: the impact of coronavirus (pdf)
The Vulnerability Guidance is issued under our Principles. It sets out our views of what firms should do to comply with the Principles, and to ensure the fair treatment of vulnerable consumers.
We supervise and enforce against the standards set by the Principles, as well as our rules, taking into account relevant guidance.
In our Mission, we are clear that understanding user needs, and recognising where some users may be vulnerable, is a key factor in the way we make regulatory judgements.
This finalised guidance will support us as we apply a ‘vulnerability lens’ to supervising and enforcing the standards set by our Principles and rules.
Firms can expect to be asked to demonstrate how their business model, the actions they have taken, and their culture, ensures the fair treatment of all customers, including vulnerable customers.
We will continue to monitor and evaluate the impact of the Guidance and how firms are embedding this throughout their businesses.