Customer Vulnerability

Consumer Vulnerability
Martin Coppack
Consumer & Market Intelligence
Current perspectives in a nutshell…
Consumer organisations
Lots being done
Numerous good practice guides
for dealing with different ‘types’
of consumer
Head office policies and systems
in place
Goodwill amongst staff
Complex area
Numerous good practice guides &
systems may be in place
Recognise there is goodwill
amongst FS staff
FS staff on the front line not
always trained appropriately
Products & services not flexible
Not always “rocket science”
End consumer
Lack of consistency in approach
Products and services often do not
reflect/react to the realities of
people’s lives
One poor decision/action can lead
to significant detriment
What do we mean by ‘consumer
”A vulnerable consumer is someone who, due to their personal
circumstances, is especially susceptible to financial detriment,
particularly when a firm is not acting with appropriate levels of care.”
(PRR definition)
Those who have been vocal on this
Consumer Futures
Outcomes Approach
More concerned with what “good” looks like to consumers than exact definitions
of vulnerability.
A best practice, more consistent, approach should be developed for FS market
All financial services firms create and put into practice
appropriate strategies to address the needs of consumers in
vulnerable circumstances.
…to make markets work well for consumers so they can get a fair deal &
products & services which meet their needs over their lifetime
What does good look like?*
Firms should have appropriate policies in place to identify
consumers in vulnerable circumstances
 There should be a consistent approach within firms.
 Firms should seek proactively to identify vulnerability
Firms should put in place policies to approach consumers in
vulnerable circumstances in a sensitive and flexible way
 Vulnerability factored into product design, marketing and service
 Firms adaptive and empathetic
 Staff adequately trained to implement policy
Firms should be as transparent as possible in their dealings with
consumers in vulnerable circumstances
 Firms’ policies clear to consumers and consumer organisations
* According to consumer organisations who attended our vulnerability roundtable.
Why is this on our agenda?
It aligns to several of our statutory powers:
• In considering the appropriate degree of consumer protection, the FCA must have
regard to
- “the differing degrees of experience and expertise that different consumers may
In considering its competition objective, the FCA may have regard to
- “the ease with which consumers who may wish to use those services, including
consumers in areas affected by social or economic deprivation, can access them”
It also aligns to several existing elements of our supervision, for example:
• FCA Principles 6 & 7
- “a firm must pay due regard to the interests of its customers and treat them fairly”.
- “a firm must pay due regard to the information needs of its clients, and
communicate information to them in a way which is clear, fair and not misleading”.
Why is this on our agenda?
BCOBS 4.1.5 requires that the information requirements (elsewhere) in
- “may vary according to matters such as the information needs of a reasonable
recipient having regard to the type of retail banking service that is proposed or
provided and its overall complexity, main benefits, risks, limitations, conditions
and duration”
ICOBS has rules requiring:
- customer communications to be clear, fair and not misleading (ICOBS 2.2.2R)
- information provided to be appropriate for an informed decision (ICOBS 6.1.5R)
- insurers to handle claims fairly (ICOBS 8.1).
CONC 8.2.7:
A firm must establish and implement clear and effective policies and
procedures to identify particularly vulnerable customers and to deal with such
customers appropriately.
What are we doing about it?
• Consensus-building with both Consumer and Trade Bodies –
what does good look like, problems and issues
• Embedding the concept of vulnerability into different work
streams across the FCA
• Producing an Occasional Paper on consumer vulnerability to be
published early next year
• Impact of industry behaviour
• Policy/practice gap
• What good looks like
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