How to meet the FCA’s expectations on vulnerable clients


The treatment of vulnerable customers is an area of increasing focus at the Financial Conduct Authority.

Back in 2015, the regulator challenged firms to review their approach to consumer vulnerability and released its Occasional Paper No 8 on the subject.

In Feb 2016, the FCA released its report on Assessing Suitability: Research and Due Diligence of Products and Services.

The report shared the outcomes of its thematic review into the research and due diligence processes carried out by advisory firms on the products and services they recommend to retail clients.

While the need for suitability extends beyond the vulnerable, ensuring your products and services are suitable becomes even more crucial when dealing with your most vulnerable customers.

Embed compliance into your firm's DNA

The conclusion we drew from the review’s findings was that ensuring suitability in financial services all comes down to creating a compliant culture.

If you have a corporate ethos that puts good governance at the heart of what you do, then you shouldn’t go far wrong in delivering suitable advice. This is true for any customers, including those who are potentially vulnerable.

Make sure your financial promotions follow the FCA’s rules on treating customers fairly (TCF) and take care to meet regulatory standards on suitability and disclosure.

Put your customer at the heart of your marketing, sales and advice processes and you will be on the right lines when it comes to suitability. You can read more about how to achieve this in our blog on how to convert client care promises into action.

How can you deliver fair treatment for vulnerable customers?

The tips above will help to ensure your overall processes, approach and corporate ethos are compliant and meet the needs of the majority of your customers.

There are a few practical steps you should take to ensure the particular fair treatment of vulnerable consumers.

1.  Review about your current approach

How do you communicate with your customers? Are you confident that everything you send out adheres to the FCA’s guidance on TCF, is fair, clear and not misleading and delivers the regulator’s required consumer outcomes?  

Would you communicate in the same way to a client if you knew they were vulnerable? How might your approach differ?

And how would you identify that they were vulnerable in the first place? Audit your current processes to ensure that you are able to identify these contacts. 

2.  Develop clear policies

You need standardised and well-communicated guidelines on how to spot a vulnerable client, and how to alter your approach once someone has been identified as such.  

Ensure everyone in the firm has seen and understands your policy. Have clear rules on how these customers should and should not be treated.

3.  Continuously improve your approach

Evaluating your processes and measuring how well they serve your vulnerable consumers will enable you to refine your approach. Do you ask customers about their experiences? What do they tell you you’re doing well, and what could be done better?

It looks as if the FCA will continue to focus on suitability and vulnerability – and you should too. Hopefully these tips have given you some concrete actions which will help to deliver on this.

For advice on how to treat all your customers fairly, you can download a copy of our TCF FAQs document. It covers frequently asked questions looking at:

  1. What TCF is

  2. Expectations of firms

  3. Evidencing TCF (management information)

  4. Culture

  5. Requirements for providers and distributors

You can download the FAQs here.

Nothing in this document should be treated as an authoritative statement of the law. Action should not be taken as a result of this document alone. We make no warranty and accept no responsibility for consequences arising from relying on this document.

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