The ‘original’ consultation – 2015
In February 2015, the Financial Conduct Authority (FCA) published their original consultation that focused on vulnerable customers titled simply ‘Consumer Vulnerability’. In this paper they set out their definition of a Vulnerable Customer as ‘someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.’
A ‘follow-up’ consultation – 2017
In November 2017 the FCA launched a further Consultation Paper “Our Future Approach to Consumers”. This marked the beginning of the FCA’s discussion with many stakeholders concerning how they regulate the market for retail consumers. Much further attention was given to the cause of vulnerable customers, with the FCA further emphasising their vision for a UK financial services market where “…the needs of all consumers, including vulnerable consumers are taken into account.”, that they “expect all firms to exercise extra care where consumers may be vulnerable..” and that they will “intervene by taking enforcement action where vulnerable consumers are deliberately exploited”.
The latest consultation, and a strengthened approach in 2019.
In July 2019, the FCA launched its most recent consultation on the fair treatment of vulnerable customers, and which further strengthened its approach to consumer vulnerability. The FCA stated that they clearly believe that some firms are failing to consider the needs of vulnerable consumers, leading to harm. They promised guidance which will set out what the FCA Principles require of businesses moving forward to ensure the that consumers are treated fairly on a consistent basis across all financial sectors.
In introducing this latest 2-stage consultation, Christopher Woolard, Executive Director of Strategy and Competition at the FCA stated that ‘Protecting vulnerable consumers is a key priority for the FCA and we want to see firms explicitly embedding the fair treatment of vulnerable consumers into their culture. Where we find that firms are not doing enough to ensure that consumers are treated fairly, we will take action. Firms need to take particular care to ensure that vulnerable consumers are treated fairly as they may be more likely to experience harm.’
According to the FCA, the final guidance, which will be published once the consultation process is completed should ‘drive improvements across the industry, improving outcomes for millions of vulnerable consumers’.
How We Can Help
Richdale was established with a commitment to ensure that all our clients, including Appointed Representatives and Directly Authorised firms, are suitably equipped to provide their clients with the very highest standards of service, in a fully compliant manner. Our team is always delighted to help financial service firms become compliant with their FCA obligations and help ensure they safely navigate the regulatory terrain and continue to operate successfully and thrive as a business.
We have always given very serious thought to how our clients handle the needs of their customers, including specifically the treatment of vulnerable consumers. We have created firm-specific guidance documentation on both the importance of treating customers fairly, and the needs of vulnerable customers.
We welcome the latest consultation which ‘joins’ these two crucial topics. With the guidance that emerges, we see an even greater opportunity to help financial services firms demonstrate their ongoing commitment to treating all customers, and in particular vulnerable customers, fairly across all business activities.
If you have any questions or concerns regarding the fair treatment of vulnerable customers, or the impact this or any other regulatory topic may have on your firm, please do not hesitate to get in touch.