Although the Financial Conduct Authority (FCA) found many examples of good practice, where firms were being considerate towards potential vulnerability, it also identified incidents where others had used it to exploit customers. In some cases a potential vulnerability was just not considered.

Following a consultation, the FCA published research and presented a variety of case studies which illustrated situations where customers displayed signs of being vulnerable and how staff had responded.

It published one example where a man who has been made redundant and had subsequently split from his wife approached a broker to get help with a mortgage renewal. He was nervous about the process and worried his lack of payslips might hinder his remortgage.

There was a positive outcome as the broker in question demonstrated empathy, was reassuring and found a suitable deal.

There was a more negative example, however, involving man who hoped to gain forbearance on his mortgage repayments after a back injury meant he had to give up work. The customer was denied a request to defer or change terms of the mortgage despite having never missed a payment before.

The customer was forced to sell his car to make up the shortfall and felt the bank in question read off a script during the discussions and didn’t offer him any flexibility or alternatives.

The FCA said more than 24 million people displayed one or more potential characteristics of vulnerability including physical or mental health issues, recent life event such as bereavement, capability and financial resilience. Over a million people received debt advice last year.

Now the regulator said firms must do more to ensure vulnerable consumers are receiving positive outcomes.

Treating fairly

Christopher Woolard, interim chief executive at the FCA, said: “[The] guidance sets out what firms should do to ensure vulnerable consumers are being treated fairly.

“We know many more customers will be struggling with their finances as a result of the impact of coronavirus. Supporting vulnerable consumers is a key focus for the FCA, and the coronavirus crisis has only highlighted its importance.

‘While many firms do excellent work to support their vulnerable customers, we will not hesitate to step in where others do not.”

UK Finance said the banking and finance industry had put a clear plan in place to help customers whose finances have been impacted by coronavirus – particularly those in vulnerable circumstances. This included payment deferrals and providing support through dedicate helplines for those shielding who needed access to cash.

Stephen Lowe, group communications director at Just Group, said: “We know that most firms have embraced the vulnerability issue and are taking steps in the right direction, but some are more advanced than others.

“Our own research last year found 94% of firms said they were treating the issue seriously. Embedding vulnerability is a challenge so the additional guidance and clarity provided by this latest consultation will be widely welcomed.”