FCA guidance on treating vulnerable customers fairly

We have received the following from the FCA;

“On Tuesday 23 February, we published guidance for firms on the fair treatment of vulnerable customers. Protecting vulnerable consumers is a key focus for the FCA and is more important than ever due to the impact of coronavirus (Covid-19). Our Guidance on the fair treatment of vulnerable customers aims to help firms ensure they are treating their vulnerable customers fairly.

The Guidance sets out what firms should do to treat vulnerable customers fairly, which is necessary to comply with our Principles. It is important for all firms serving retail customers.


We have developed a toolkit to help firms. This includes links, web copy, social media posts and a video that you can use on your own channels. The toolkit resources are summarised below:

  1. Link to our Guidance summary
  2. Explainer video – our approach to ensuring vulnerable customers are treated fairly and outlines actions firms should take: https://rlink.re/l/52b07dc2/1bf0/4a9a/8d7d/064492bc430b

What the FCA wants to change

The FCA wants to drive improvements in the way firms treat vulnerable consumers and bring about a practical shift in firms’ actions and behaviour. The FCA wants vulnerable consumers to experience outcomes as good as other consumers and to get consistently fair treatment across the sectors it regulates. The FCA knows some firms have made significant progress in how they treat vulnerable customers, including in their response to the pandemic.

However, the FCA has seen examples of others failing to consider the needs of vulnerable customers, leading to harm. It is important for all firms to understand the needs of vulnerable customers and make any changes required to meet the standards set by the FCA’s existing Principles for Businesses (Principles).

Who are vulnerable customers?

A vulnerable customer is somebody who, due to their personal circumstances, is especially susceptible to harm – particularly when a firm is not acting with appropriate levels of care.

Vulnerability is viewed as a spectrum of risk. All customers are at risk of becoming vulnerable, but this risk is increased by having characteristics of vulnerability. These could be poor health, such as cognitive impairment, life events such as new caring responsibilities, low resilience to cope with financial or emotional shocks and low capability, such as poor literacy or numeracy skills.

Not all customers who have these characteristics will be vulnerable. But they may be more likely to have additional or different needs which, if firms do not meet them, could limit their ability to make decisions or to represent their own interests. So the level of care that is appropriate for these consumers may be different from that for others.

Complying with Principles for Businesses

The FCA’s Principles require firms to treat customers fairly and the Guidance makes clear what the standards set by our Principles mean for firms, so that firms understand what is expected of them. It sets out what firms should do to meet those standards. While firms are not bound to adopt or follow any of the specific actions described in this Guidance, they must meet the standards set by the Principles and treat customers fairly. Because anyone can find themselves in vulnerable circumstances at any time, the Guidance is relevant to firms serving retail customers, including some business customers, regardless of the firm’s size or sector.

To achieve good outcomes for vulnerable customers, firms should take action to:

  • Understand the needs of their target market/customer base
  • Make sure staff have the right skills and capability to recognise and respond to the needs of vulnerable customers
  • Respond to customer needs throughout product design, flexible customer service provision and communications
  • Monitor and assess whether they are meeting and responding to the needs of customers with characteristics of vulnerability, and make improvements where this is not happening

The Guidance sets out the actions firms should take in each of the above areas to treat vulnerable customers fairly. Detail on each of these actions, as well as examples of how firms can put them into practice and case studies showing good and bad practice, can be found in the Guidance.

The FCA supervises and enforces against the standards set by the Principles. Firms can expect to be asked to demonstrate how their business model, the actions they have taken and their culture ensures the fair treatment of all customers, including vulnerable customers. For more information please read the guidance on the FCA’s website.”

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

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About the Author

Lisa has a wide range of skills and knowledge, and a track record of implementing compliance and T&C systems and processes of the highest calibre, covering all aspects of financial services.

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