The FCA is consulting on best practice guidelines to help IFAs protect their vulnerable customers. The regulator says many firms are doing excellent work to support those with vulnerabilities, however, it is also aware of cases where vulnerability is not considered by firms. The FCA warns that it will crack down on those which are exploiting vulnerable customers for gain.
The FCA says that over 24 million people display characteristics of vulnerability, including physical and mental health issues and recent life events such as bereavement. It warns that others will be struggling with their finances as a result of the Covid-19 pandemic.
The guidance provides a framework to help firms to assess whether they are treating vulnerable consumers fairly. Research issued alongside the guidance on vulnerable consumers’ experiences of dealing with financial services firms highlights four key themes for advisers to consider:
- Recognising vulnerability and understanding customers’ needs
- The value of sympathy
- The importance of empowered and knowledgeable staff
- Meeting vulnerable consumers’ communication needs
Christopher Woolard, interim Chief Executive at the FCA, said: “Today’s guidance sets out what firms should do to ensure vulnerable consumers are being treated fairly. Supporting vulnerable consumers is a key focus for the FCA, and the coronavirus crisis has only highlighted its importance.”
The consultation is now open and will close in September 2020, with the finalised guidance expected to be issued later in the year.
James Burgoyne, Director – Claims & Technical, Brunel Professions welcomed the regulator’s move. “I am sure that the vast majority of firms are taking the issue of vulnerability seriously and this guidance will help them to achieve best practice. 2020 has been a very difficult year and it is important that the pressures it has brought are recognised.”
Brunel secures competitive professional indemnity insurance cover for financial services professionals. To find out more visit the Brunel website or call Mark Sommariva on 0203 475 3275.