Recent findings by the FCA estimates that 27.7 million adults in the UK are in circumstances that could make them vulnerable customers. The aim of the newly updated guidance, which applies to all firms regulated by the FCA, is to ensure that vulnerable customers experience outcomes as good as other customers and are treated fairly and in a consistent manner.
Whilst firms do have a legal and regulatory responsibility regarding vulnerable customers, it is not solely a regulatory issue. Essentially, identifying vulnerable customers demonstrates commitment to your customers and serves to give you a better understanding of their individual circumstances. It also demonstrates good business practice.
What is a vulnerable customer?
The FCA defines a vulnerable customer as:
“Someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.”
Vulnerable customers are more likely to have additional or different needs which, if not met by firms, could increase the risk of harm for those individuals if, for example, they have difficulties in making decisions or representing their interests due to a characteristic of vulnerability.
If we have learnt one thing from the past year, it is how quickly an individual’s circumstances can change. The ongoing pandemic has highlighted that life turns on a dime. Secure jobs can disappear; households experiencing a sudden dramatic drop in income; and the challenges of lockdown and home schooling has increased mental health pressures at home.
When encountering vulnerability, firms should assist customers to help them understand their products so they can make an informed decision.
If we have learnt one thing from the past year, it is how quickly an individual’s circumstances can change.
How should firms respond?
Under the FCA’s guidance, it is recommended that firms and their staff:
- Understand the needs of vulnerable customers, including the characteristics of vulnerability in their customer base and the impact of vulnerability on their consumers.
- Train staff so that they have the skills and capabilityto recognise and respond to characteristics of vulnerability appropriately. Moreover, the firm should embed a culture across the organisation where the fair treatment of vulnerable customers is recognised as important.
- Take practical actionin terms of product and service design, customer service and communications.
- Monitor and evaluatewhether the firm’s measures to meet the needs of vulnerable customers are met. This includes producing and reviewing relevant management information.
If you or your staff require assistance on recognising and assisting customers with a vulnerability, Searchlight are currently offering several workshops designed to help. Get in touch today, call: 01372 361177 or email: firstname.lastname@example.org. Alternatively view our other course offerings on our website: www.searchlightsolutions.co.uk
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