FIRMS’ TREATMENT OF VULNERABLE CUSTOMERS – ARE THEY COMPLYING WITH THEIR CONSUMER DUTY OBLIGATIONS?
Under the Financial Conduct Authority’s (FCA) Consumer Duty, firms must act to deliver good outcomes for retail customers (principle 12 of the FCA’s Principles for Businesses), including those with characteristics of vulnerability. After all, the FCA’s 2022 Financial Lives report (published in July 2023) stated that over half (27.3 million) of UK adults demonstrated characteristics of vulnerability.
In March 2024, the FCA announced in its business plan for 2024/25 that it will conduct a review into how firms are acting to understand and respond to the needs of customers in vulnerable circumstances and will share its findings by the end of 2024. More recently, in May 2024, the FCA sent ‘Dear CEO’ letters to firms on the implementation of the Consumer Duty for closed products and services by 31 July 2024, highlighting the treatment of customers with characteristics of vulnerability as a priority area for firms to consider as part of that implementation (i.e., firms must consider if customers with characteristics of vulnerability who hold closed products and services experience poor outcomes).
Firms’ treatment of vulnerable customers is a key agenda item for the FCA over the coming year and the pressure is on firms to ensure that they have appropriate systems and controls in place to meet the FCA’s expectations in this area and comply with principle 12, to avoid potential regulatory scrutiny including enforcement action.
So, what are the FCA’s expectations regarding firms’ fair treatment of vulnerable customers and what should firms be doing to ensure they are meeting these expectations and complying with principle 12 of the FCA’s Principles for Businesses?
Jul-Sep 2024 Issue
Fox Williams LLP