From: RegTech Analyst
As more than 24 million people across the UK find themselves in a vulnerable position, the country’s top financial markets watchdog is proposing new protection.
The Financial Conduct Authority (FCA) has published new proposed guidance for financial services firms to ensure they keep vulnerable consumers’ need at the top of mind. It has now opened up a consultation about the proposal to the industry. The consultation is open until September 30.
“Today’s guidance sets out what firms should do to ensure vulnerable consumers are being treated fairly,” said Christopher Woolard, interim chief executive at the FCA. “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.”
Vulnerable consumers include people suffering from physical and mental health issues as well as those who have endured recent life events such as bereavement, capability and financial resilience. The FCA says firms should do more to ensure that vulnerable consumers are receiving positive outcomes.
The consultation incorporates feedback from a range of bodies including consumer organisations, firms and trade bodies following the first phase of consultation in July 2019.
The research particularly focused on four key themes for firms: how to recognise vulnerability and understanding customers’ needs, the value of sympathy, the importance of empowered and knowledgeable staff, and how they can appropriately meet vulnerable consumers’ communication needs.
Kareline Daguer, director at PwC UK, welcomed the new proposals. “Now more than ever, protecting the most vulnerable should be a priority, so we welcome the draft guidance the FCA has published on the fair treatment of vulnerable customers,” she said.
“The guidance is moving towards a more prescriptive approach and firms should understand how vulnerability affects consumers. Staff should have the right skills and capabilities to effectively monitor outcomes, while firms should carefully consider how they design their products and engage with their customers.
“In the current environment, firms should take the tone and sense of urgency in this guidance seriously and reflect on what they have done and what they should be doing over the next few months to deliver fair outcomes.
“With a backdrop of potentially increased unemployment and mental and physical health issues, firms will need to ensure their culture, processes and controls can meet the needs of their vulnerable customers and regulatory expectations.”
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