Data released by the FCA shows 7.4m people were struggling to pay their bills and credit repayments in January 2024, showing many people continue to be impacted by the cost of living crisis. This follows the FCA’s latest crackdown on the treatment of vulnerable customers, which should come as a stark warning to firms to ensure they have the right framework in place to protect consumers, says RSM UK.
The FCA recently announced it would be undertaking a review of firms’ treatment of vulnerable customers, including their understanding of consumer needs, the skills and capability of staff, and standards of customer service. It will also examine the outcomes for vulnerable customers and whether they are as good as those received by other customers, all of which falls under the Consumer Duty.
In many cases, individuals may not see themselves as ‘vulnerable’, but according to the FCA, 50% of people will be considered vulnerable at some point in our lifetime. Worryingly, in the wealth management sector, nearly half (49%) of portfolio managers and over two thirds (69%) of stockbrokers from the FCA’s wealth data survey claimed they had no vulnerable customers in their client base.
Commenting on this, RSM UK associate director, Zoe Morton, said: “There’s a growing number of vulnerable customers in the UK, particularly in the current cost of living crisis, making it more important than ever that firms get things right. But they face a huge challenge, as many customers may be classed as ‘vulnerable’ according to the FCA’s criteria without them even realising it, due to situations such as a bereavement or divorce for example. This can make it extremely difficult for organisations to know just how many vulnerable customers they are dealing with at any time.
“The FCA’s guidance on the fair treatment of vulnerable customers was issued over three years ago, but it appears progress among some firms has stalled. The onus is on businesses to understand the vulnerabilities that are prevalent amongst their customer base and ensure they have the necessary measures in place to protect and support consumers, from financial hardship for example. This could be through looking out for vulnerable indicators and sensitively dealing with these, along with signposting consumers to appropriate charities and organisations that can support further. The FCA continues its focus on this area, so we’re likely to see an uptick in routine visits to organisations, requesting information that demonstrates good practice and potential enforcement and financial redress to consumers for those that are not complying with the requirements.”
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