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FCA sends firms “clear signal” on vulnerability

The Financial Conduct Authority (FCA) has launched a consultation on proposed guidance for firms on the fair treatment of vulnerable customers.

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The guidance sets out the FCA’s view of what the FCA Principles require of firms to ensure that vulnerable consumers are consistently treated fairly across financial services sectors.


The regulator said it “wants to see doing the right thing” for vulnerable consumers “deeply embedded” in companies’ cultures.


Firms will need to think about what the guidance means for their business and customers, and how they are understanding and addressing the needs of vulnerable customers, it said.


While many firms have made significant progress in how they treat vulnerable consumers, the FCA believes that there needs to be more consistency across financial services sectors. In some cases, it said, firms are clearly failing to consider the needs of vulnerable consumers, leading to harm.


Chris Fitch, vulnerability lead for the Money Advice Trust, said: “This proposed new guidance helpfully summarises the FCA’s expectations on firms – and its strong emphasis on areas such as product design and front-end customer services in broad terms, beyond debt collection alone, is particularly welcome.


“The planned cost-benefit analysis appears to suggest an attempt to incorporate an element of ‘commercial realism’ in the regulator’s future plans in this space. This will need take into account a wide range of input on what costs and benefits need to be included, and transparency will be key.


“While the consultation on this new guidance will take place over a long period, many of the challenges it identifies need addressing right now.”


Christopher Woolard, executive director of strategy and competition at the FCA, said: “Protecting vulnerable consumers is a key priority for the FCA and we want to see firms explicitly embedding the fair treatment of vulnerable consumers into their culture. Where we find that firms are not doing enough to ensure that consumers are treated fairly, we will take action.


“Firms need to take particular care to ensure that vulnerable consumers are treated fairly as they may be more likely to experience harm. The guidance should drive improvements across the industry, improving outcomes for millions of vulnerable consumers”.


The guidance will be consulted on in two stages and the FCA is asking for comments on this first stage of the consultation by October 4, 2019.

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