As an advocate for the fair treatment of vulnerable customers, I was keen to read the Financial Conduct Authority’s long-awaited published Guidance. In this article, I summarise the key points that I have taken from the document.
Firstly, the Guidance is clear and more concise than the previous consultations. It is written in a positive and straightforward tone of voice making it easier to read and digest. Often these guidance documents can be quite dry!
Although it uses the term ‘vulnerable’ throughout, and we are all now accustomed to the term, both as firms and customers, the guidance encourages companies to avoid this word in interactions with customers. The guides goes to explain that firms ‘should focus on what harm or disadvantage customers may be vulnerable to and how they can respond appropriately’.
The 6 PillarsThe Guidance lays out 6 key areas financial organisations need to be addressing. I have affectionately called these pillars as in essence they support everything firms need to do to treat vulnerable customers fairly.
These are deemed essential for fully embedding vulnerability into the company culture and ethos.
The FCA expects evidence of any actions that have been taken to address each point. To make it easier, the Guidance includes good practice examples, along with practical action firms can take to minimise the risk of harm to vulnerable customers.
Shared Responsibility Throughout the Customer JourneyThe Guidance makes it clear that the issue of fair service for vulnerable customers is not to be handed to a single employee or team. It isn’t just the responsibility of front-line staff, senior managers or policy writers; it has to be embedded across the entire workforce.
I am encouraged to read that every department, at every touchpoint of the customer journey, has a part to play. This champions internal communication and specialist staff training to build awareness, skills and capabilities in all employees.
The FCA stress the need for staff to have the ability to respond flexibly and, the guide points out that company culture and systems must work together. This includes adapting communication methods and channels to aid vulnerable customers as well as a ‘tell us once’ policy.
Proactive Approach to Vulnerable Customer ServiceIt was interesting to note that the terms ‘proactive and proactively’ appear 15 times in the document.
Rather than a tick box exercise, the focus is on a proactive approach, attitude, and internal business strategy. Firms must integrate an understanding of the needs of vulnerable customers in their business strategy. This insight should inform and drive appropriate actions to support customers experiencing vulnerable circumstances.
Empowering Vulnerable CustomersI was delighted to read that firms should consider how they can empower consumers. I believe this is key to treating vulnerable customers fairly.
It encourages companies to focus on enhancing accessibility in all its forms. In doing so, customers are better able to obtain the information or resources needed to make informed decisions. When physical, digital, language and other barriers are removed, individuals can be more independent.
The Industry StandardIn the draft guidance, the FCA made it clear that firms should not delay in implementing actions. Treating vulnerable customers fairly should be the industry standard and the guidance comes into effect immediately. Fines have already been issued to some firms that have failed customers.
As we follow the roadmap out of lockdown, we know that many customers will have been impacted. This makes it a timely document that every financial organisation should pay heed to.
With the publication of this guidance, it will be interesting to see how quickly and heavily the FCA come down on firms not treating vulnerable customers fairly.
Continuous ImprovementThis is a powerful and practical document, but it does not provide a checklist of required actions. Instead, it encourages firms to use their judgement and decide precisely what the guidance means for them and their customers.
There is an expectation that this will be a process of continuous improvement. With this in mind, there are examples of how companies can monitor progress. These include focus groups, reviewing complaints data and encouraging staff feedback.
Addressing Vulnerability in non-Financial IndustriesThe FCA has taken the lead in addressing vulnerability. At present, these standards only apply to the financial industry. It will be interesting to see whether other industries follow suit.
I would be fascinated to hear your response to the published FCA Guidance. What statements caught your attention? Do you face challenges in fulfilling any of the 6 pillars?