The regulator says that millions of people have displayed “one or more potential characteristics of vulnerability” and need better protection from exploitative companies.
Vulnerable customers can suffer from physical and mental health issues, bereavement and capability and financial resilience issues.
The FCA says that while many regulated firms are good at looking after vulnerable customers there is evidence that a minority “exploit” the vulnerable.
The FCA says firms need to “do more” to ensure that vulnerable consumers receive positive outcomes and regulated firms need clearer guidelines.
The ‘GC20/3: Guidance For Firms On The Fair Treatment of Vulnerable Customers’ consultation includes feedback from a range of bodies including consumer organisations, firms and trade bodies following the first phase of consultation in July 2019.
The FCA says it found many examples of good practice and firms thinking carefully about their customers and potential vulnerability. However, the FCA said it was also aware of cases where vulnerability is either not considered by firms or “positively exploited for gain.”
The guidance aims to provide a framework that allows all firms to accurately assess whether they are treating vulnerable consumers fairly.
Alongside the draft guidance the FCA has also published research on vulnerable consumers’ experiences of dealing with financial services firms.
The research highlighted four key themes for firms:
- Recognising vulnerability and understanding customers’ needs
- The value of sympathy
- The importance of empowered and knowledgeable staff
- Meeting vulnerable consumers’ communication needs
Christopher Woolard, interim chief executive at the FCA, said: “'Today’s 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.”
The guidance is open for consultation until 30 September.
Stephen Lowe, group communications director at Just Group, said: “We are pleased to see the regulator is pushing on with its vulnerability agenda and providing more detail about how it expects firms to meet their obligations. The Coronavirus pandemic has brought many of the vulnerability issues the FCA is trying to tackle into sharp focus – health problems, bereavement, job loss, financial stress – and is a reminder how quickly people's circumstances can change due to events outside their control."