FCA challenges firms to review approach to consumer vulnerability

Research published by the Financial Conduct Authority (FCA) reveals that some vulnerable consumers seeking help from financial providers are meeting ‘a computer says no’ approach, putting them at risk of further detriment.

Occasional Paper on Consumer Vulnerability

The FCA's Occasional Paper on Consumer Vulnerability, launched by chief executive, Martin Wheatley at the British Bankers’ Association conference on protecting consumers in vulnerable circumstances, is the first step in a conversation with firms to determine how the regulator and industry can work together to address issues around vulnerability. The UK’s aging population, as well as changing trends in public health and society, means that developing more inclusive policies will become increasingly important.

Martin Wheatley, chief executive of the FCA, said:

We all know somebody in a vulnerable situation and we can expect the number of people who find themselves in those circumstances to grow over the coming years. We all need to start thinking about what the solutions to these challenges will be. Whether it is accessing funds or securing a repayment holiday, we will work collaboratively with firms to identify what inclusive policies could look like and how best we can create the right outcomes for those consumers. It’s a challenge for regulators and firms alike.

Consumer protection policies

The FCA’s research shows that many consumer protection policies are designed for a ‘typical’ consumer and sometimes not flexible enough to capture individual situations. Therefore, if frontline staff can recognise the signs of potential vulnerability, they can more easily refer customers to specialist support where appropriate.

Consumer organisations have also told the FCA that they are seeing people in difficult circumstances inevitably struggling with rigid policies within some firms, exacerbating already stressful situations.

Consumer case studies

One cancer patient told the FCA that they contacted their bank to discuss a temporary loss of income but instead of talking through their options, they were told to call back when their accounts were in arrears. In another example, a carer who held a legal Power of Attorney reported that she experienced problems with a cashier refusing to serve her, and another cashier refusing to accept her blind mother’s signature. We have seen evidence of repeated issues with Power of Attorney.

The FCA’s research also revealed:

  • The response of staff both on a helpline or in branch is crucial to customers’ experience and outcomes
  • Frontline staff do not need to be experts but they need to know where internal expertise lie and when to refer people on
  • Most problems relate to poor interaction or systems
  • Some consumers are overwhelmed by complex information and find it hard to distinguish between marketing and important product messages
  • In some firms there is inaccurate or overzealous approach to the rules, such as those around data protection or affordability, preventing firms meeting the needs of vulnerable consumers.

The FCA’s analysis also shows that it is not just those people who experience sudden life-changing events that firms should consider when developing vulnerability strategies:

  • One in seven adults has the literacy skills of a child aged 11 or below (Department for Business, Innovation and Skills)
  • 7.1m UK adults have never used the internet, over half have a disability (Department for Business, Innovation and Skills)
  • 800,000 people in the UK are now living with dementia, this is expected to double over the next 40 years (Age UK)
  • The number of people aged over 85 is predicted to double in the next 20 years (Age UK)
  • Almost half of UK adults do not have enough savings to cover an unexpected bill of £300 or more (Money Advice Service).

Practitioners’ Pack

The Occasional Paper includes a Practitioners’ Pack to support firms’ understanding of how they can generate better outcomes and develop more inclusive services for vulnerable consumers.

The FCA will work with industry and trade bodies to discuss experiences, best practice and potential approaches around vulnerability issues.

For more information visit: fca.org.uk/consumer-vulnerability.

The FCA is tweeting highlights from the Occasional Paper via @TheFCA #vulnerableconsumers

Notes to editors

  1. Occasional Paper on Vulnerability

  2. Infographic on the scale of consumer vulnerability in the UK

  3. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).

  4. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.

  5. Find out more information about the FCA