The FCA’s Consumer vulnerability review: our 10-point checklist
The FCA announced on 15th March that it will be reviewing firms’ ‘treatments of customers in vulnerable circumstances’.
We were asked by the media for our perspective (FCA to review firms’ treatment of vulnerable customers) and I thought that would share the 10-point checklist we put together, picking up on some key issues we have been discussing with the FCA.
10-point checklist
This checklist will help you to work out if you’re looking at the right things. It’s not definitive or exhaustive.
If the number of vulnerable people you’ve identified is in single digits, then it’s likely not sufficient. Around 50% of people are vulnerable at any given time and we’re all vulnerable at some point.
Are you assessing for all vulnerabilities – health and life events – as well as financial wealth?
Are you attempting to proactively assess all customers, not a subset (such as those who phone in, claim or default)?
Do you wait for customers to volunteer that they are vulnerable or self-identify a vulnerability? (We have found that this reveals only a small proportion of the vulnerable population.)
Are you using agents/users to assess vulnerability? (We have found that these can often underreport so, if this method is used, then it needs training and monitoring.)
Are you recording those with protected characteristics, to ensure they receive equitable outcomes, in accordance with the Equality Act?
Are you monitoring changes in vulnerabilities over the lifetime of a product? (This may be the distributor, the manufacture or both. Hoping that the other is doing this isn’t going to cut it.)
Can you evidence how you act on identified vulnerabilities – for example, changing how you communicate, or amend your processes?
Can you evidence of all the above – using good quality, consistent data?
Will you be able to report, for July, on the outcomes received by vulnerable cohorts at board level (bereaved, divorced, those in debt, those with a life-limiting illness and so on) compared to the resilient?
Many firms are now realising this managing consumer vulnerability is trickier than they thought. To make this easier, and keep costs down, we built the consumer vulnerability management software we call MARS.
In practice, few firms meet all the above requirements, especially reporting and monitoring. We recommend having plans in place to demonstrate progress and intent – and there is little excuse to be not assessing customers when interacting with them at point of sale or annual reviews.
I hope the checklist is useful and I’m of course happy to chat about any of these with you, just get in touch.
