The FCA is going to publish the “Guidance for firms on the fair treatment of vulnerable customers” in the next couple of weeks. In this new policy, the FCA highlights that protecting vulnerable consumers is a key priority for them and wants to ensure that these customers can experience outcomes that are as good as those for other consumers.
We find that the popular “equality and equity baseball picture” perfectly captures how the FCA is shifting their consumer protection focus from Equality to Equity. The principle of “fair treatment of customers” was a groundbreaking policy that triggered the outcomes-based regulatory approach across the world. While this regulation ensures that FS firms have good customer outcomes at the core of everything they do, it failed to address the special circumstances and needs of vulnerable customers. The new policy addresses this issue ensuring that FS firms provide custom tools and services that identify and address inequality.
In short, most of us can be vulnerable as we can be affected by the following issues at some point in our lives:
The first challenge firms face is to identify these drivers of vulnerability among their customers and measure their impact and severity. The objective is twofold, support customers who are at greater risks of harm, and act early to prevent the risk of harm growing…as the saying goes “an ounce of prevention is worth a pound of cure”.
The FCA acknowledges that the standards firms should follow can vary widely due to the differences in services offered, firm size and customer base. However, firms should take the following steps to ensure that they are treating vulnerable customers fairly:
While the FCA has defined the framework to better support vulnerable customers, it has taken a hand-offs approach in prescribing potential solutions. The FCA justifies this approach as prescribing minimum standards could result in the unintended consequence of “levelling down” the solutions implemented by firms. We go one step further, and we also believe that this approach will drive a wave of innovation as firms will face a clean-sheet design process to comply with this new policy.
Inbest helps FS institutions to increase the engagement of vulnerable customers by making them aware of the benefits and grants available to them. FS institutions can embed Inbest benefits calculator across their customer journeys and demonstrate compliance with the FCA Guidance for firms on the fair treatment of vulnerable customers.
Contact us to view our platform in action and explore how we can help you to deliver your financial inclusion strategy.