Fair Treatment of Vulnerable Clients

Our article dated 22 August 2019 provided information regarding the FCA’s recent activity regarding the fair treatment of vulnerable customers (GC19/3). 

A reminder … 

GC19/3
The FCA’s intention in proposing the guidance is to make clear what, in their view, firms should do to ensure that vulnerable customers are treated fairly and consistently across all financial services sectors. They want to see firms doing the right thing for vulnerable consumers and embedding this in their culture. 

The two-stage approach to this consultation commenced with GC19/3, the consultation requested feedback on three specific areas by 4 October 2019. This consultation stage has now closed and, before the FCA consult again on the Guidance, they are sending out an ‘Information request/Survey background’ to firms in connection with the Cost Benefit Analysis (CBA) which they plan to publish alongside the second consultation. The request is not being sent to all firms, only to what appears to be a random selection. 

The information request being sent to firms asks a series of questions to help them assess the potential impacts of the proposed Guidance on firms in terms of incremental costs, as well as incremental benefits to consumers. The FCA will use the information in future policy development, to help ensure that any guidance is proportionate yet provides adequate consumer protection. 

The areas of business the FCA want to capture are those involved in the supply of products or services to retail customers, including areas that may not have a direct relationship with retail customers – for example, product providers.

The FCA hopes the responses will help them to gain a better understanding of the potential impact of the proposed guidance.

What information is being requested
The information request/survey background is in 4 sections: 

Section 1:  Preliminary questions

Section 2:  General Approach to Vulnerability

Section 3:  What does your approach to vulnerability include?

Section 4:  Costs

Section 3 requires a knowledge of what was proposed by GC19/3, and firms might find it helpful to refer to our previous article from August 2019 where we overviewed the consultation.

 Specific questions include: 

  • What firms have already done in relation to vulnerability, and existing plans (other than standard review processes) that firms have already decided to carry out, prior to knowing the specifics of the guidance. 
  • Additional plans that may arise as a result of the proposed guidance.

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.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

Our view remains that there are no specific rules or procedures to adopt in relation to this guidance at this time. The second stage guidance may change and we will keep abreast of this and write further if required. Additionally, it is likely that there will be data protection considerations to be addressed when the guidance has been finalised.

The FCA expects that core to firms achieving adherence with the principles and outcomes is adapting the firm’s culture, focusing on the people, products, services and processes. With the coming of the Senior Managers and Certification Regime there is great emphasis on culture within firms and expectation that this will be achieved starting with the leadership of the firm, interpreting what this guidance means for their firm and permeating across the firm so that doing the right thing is the responsibility of all staff.

Compliance with the guidance is likely to require modification of some of the firm’s processes and procedures.

In the meantime, we suggest creating an awareness of the concept of vulnerable clients across the firm. It would also be useful to identify any existing clients that are potentially vulnerable clients.

Action Required By You

  • Review the firm’s policy and process around vulnerable clients;
  • Ensure that all staff are aware of the requirements;
  • Identify any existing vulnerable clients;
  • Create a register of vulnerable clients;
  • Ensure that the firm has adequate management information, appropriate to the nature of its business, including in relation to vulnerable clients;
  • Speak to your usual ATEB Consultant or contact ATEB for further assistance in relation to vulnerable clients. 

     

 

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About the Author

Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

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