The Financial Conduct Authority has finalised its guidance for firms that may deal with vulnerable customers.
The watchdog first rose the alarm that the Covid-19 pandemic was likely to create more vulnerable customers back in July 2020.
It has since published research that shows that 27.7 million UK adults may possess characteristics that make them vulnerable, which includes poor health, low capability, and low financial resilience.
The FCA says that firms should understand what harms their customers may be vulnerable to “And ensure that customers in vulnerable circumstances can receive the same fair treatment and outcomes as other customers.”
It adds that it will hold firms to account over this, and that firms should expect to be asked how they abide by the guidance.
Within the documentation, the regulator says that for products sold through intermediaries in distribution chains, it requests that all firms in the chain to, “Treat consumers fairly, irrespective of whether they have a direct relationship with the consumer, or whether they design the product and service they distribute.”
Additionally, broker firms need to ensure that products are “Clearly explained and understood by the consumer, for example by following up directly with consumers.”
And where third party providers or outsources are relied on for due diligence, firms should ensure that these standards are met.
FCA director of consumer and retail policy Nisha Arora says: “Protecting vulnerable consumers remains a key focus for us and given the impact of the Coronavirus pandemic, it is more important than ever that firms get this right. The guidance being announced today will help ensure vulnerable consumers are treated fairly and achieve outcomes as good as other consumers.
“While some firms have made significant progress, we want to see all firms across sectors taking steps to understand and respond to the needs of their customers, particularly those who are most vulnerable to harm.
“We also remind customers to tell your providers if you have specific needs – whether that’s due to ill health making it difficult to access a service, or a recent emotional or financial shock that is impacting your finances. Doing this will help firms support you.”
