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Vulnerable Customer Template Policy
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Research published by the Financial Conduct Authority (FCA) reveals that some vulnerable consumers seeking help from financial providers are meeting ‘a computer says no’ approach, putting them at risk of further detriment.
A vulnerable consumer is someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.
Much consumer protection legislation is underpinned by the notion of the average or typical consumer, and what they might expect, understand or how they might behave. Consumers in vulnerable circumstances, however, may be significantly less able to represent their own interests, and more likely to suffer harm than the average consumer. This is an area where firms can take action and create good outcomes for the customer.
Why Do We Need A Vulnerable Customer Policy?
In 2015, Martin Wheatley, chief executive of the FCA, said:
“We all know somebody in a vulnerable situation and we can expect the number of people who find themselves in those circumstances to grow over the coming years. We all need to start thinking about what the solutions to these challenges will be. Whether it is accessing funds or securing a repayment holiday, we will work collaboratively with firms to identify what inclusive policies could look like and how best we can create the right outcomes for those consumers. It’s a challenge for regulators and firms alike.”
The Financial Ombudsman service (FOS) has also confirmed that they are often faced with situations which are “escalated (or deteriorated) because firms involved have rigidly applied rules and procedures – or have not concluded or even assessed the extent of the customer’s vulnerability”.
There are many documented cases throughout the Ombudsman’s Newsletters.
So, what can we take from the FOS’s comments?
There are two main points;
- Firstly, front line staff should be trained on identifying and recognising the key indicators of vulnerability. A customer may not always consider or even think that they, themselves, are vulnerable but their circumstances may indicate otherwise. It is important that wherever possible, all firms implement an early intervention strategy by hearing and not just listening to the customers, acting sensitively and making the necessary adjustments.
- Secondly, all firms should have an awareness of the transient and fluid nature of vulnerability. Vulnerability is not a static concept or permanent label to be applied, and staff should be able to adapt and apply their company policies in a flexible and pragmatic way; a simple way would be for them to consider if they would want their grand-parent or parent to be treated in this way? It is key that regulated businesses have in place a vulnerable customer policy which sets out the right approach to dealing with these situations however it is equally important that these are flexible and that the policy is applied sensitively and practically on a day to day basis.
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