FCA survey firms as part of ongoing review into treatment of vulnerable customers

The FCA has commenced its review into firms’ treatment of customers in vulnerable circumstances by writing to selected firms asking them to take part in a survey.

The review, which seeks responses from a range of firms across different markets, aligns with the regulator’s 2021 commitment to continue evaluating firms’ treatment of customers who may be vulnerable. 

The FCA has sent selected firms a questionnaire to gather intelligence around how firms are acting to understand and respond to the needs of customers in vulnerable circumstances. Whilst the survey is voluntary, UKGI strongly recommends that firms respond by the 14 May 2024 deadline to demonstrate open engagement and cooperation with the regulator. Firms are advised to set aside adequate time to complete the survey as it is detailed and covers a wide range of topics and issues.

The survey seeks to ascertain details of; firms’ customer mix and product spread, a description of action already taken by firms to ensure good outcomes, information regarding staff training, product testing, and the review processes in place to ensure the fair treatment of vulnerable customers. There are also questions relating to the type of management information firms are using, and whether Artificial Intelligence (AI) or Big Data are being used to support or inform firms’ approach to vulnerable customers. The survey will be followed by an in-depth piece of work with a subset of firms to help the FCA to gain a detailed understanding of the actions that firms are taking.

It should also be noted that the survey refers to ‘individual retail customers’ without clarifying what this constitutes, leaving room for interpretation depending on the firm and sector that they operate in. It will include all consumers, potentially ‘individuals’ as defined for consumer credit purposes, and sole traders in an insurance distribution context. If a firm answers ‘no’ when asked if the firm deals with individual retail customers, the survey ends.

The FCA’s review emphasises the responsibility of firms to be aware of their obligations to vulnerable customers, have robust systems and processes in place to ensure vulnerable customers receive outcomes which are fair and as good as those received by other customers, and continuously monitor customer outcomes. Having these systems in place not only supports good business practice but aligns with the requirements of the Consumer Duty.

The questionnaire sent by the FCA is another instance of the regulator leveraging data to inform and shape its supervisory work and demonstrates it is committed to driving forward both its 2021 commitments and the Consumer Duty.

UKGI recommends that firms who are invited to undertake the survey take time to complete it and use it as an opportunity to review their systems and processes, making any necessary adjustments or improvements if they should become apparent. Furthermore, a copy of the response should be retained in case of future query.

For more information about the FCA’s expectations of firms, see its Guidance for firms on the fair treatment of vulnerable customers (fca.org.uk). Or get in touch with the UKGI team at www.ukgicompliance.co.uk, or 01925 767888 if you have any questions on this subject or require for further support with any compliance matters.

An opportunity to grow your team’s skills and knowledge?

The FCA survey highlights the regulator’s ongoing expectation that firms are aware of their obligations to vulnerable customers and that firm-wide the culture aligns with the Consumer Duty.

However, it must also be evidenced that employees possess the knowledge and competence for their role and are equipped to deliver good customer outcomes firmwide.

Annual CPD training is a great way to record regulatory compliance and demonstrate that relevant training has been undertaken- why not use the review as an opportunity to refresh the knowledge and skills of your team?

Courses of interest may include:

• Vulnerability: Identifying, Understanding and Supporting Vulnerable Customers in Financial Services (Multi module course)
• Vulnerable Customers Pathway (Multi module pathway)
• Consumer Duty: The Four Outcomes (Muti module course)
• Consumer Harm: Identification, Prevention, and the Consumer Duty (Multi module course)

Get in touch at devzone@ukgigroup.com to find out more about how The Development Zone can enhance your firm’s learning and development in line with regulatory CPD requirements.