Katherine Clark, solicitor at Ford & Warren, looks at the recent FCA paper on consumer vulnerability
Back in November’s issue I covered the topic of treating vulnerable customers fairly. At that point, the importance the FCA attributed to this subject matter was evident from it featuring prominently in the Consumer Credit Sourcebook (CONC) and within its conduct principles.
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Since then, the FCA has focused further on this topic and published a discussion paper – Occasional Paper No. 8: Consumer Vulnerability. The aim of this paper is to encourage a greater understanding around the issue of vulnerability and to provide assistance and resources to firms in putting together and rolling out a vulnerability strategy.
The paper identifies that much of the protection afford to consumers is aimed at the "average" or "typical" consumer, which potentially leaves vulnerable consumers with inadequate protection in a market which has complex products and could see an individual signing up to a long-term commitment.
The paper provides a thorough analysis of what vulnerability is and the wide variety of situations which can lead to a consumer being vulnerable.
It sets out problem areas that have been identified, for example lack of strategy, complex products being offered and unclear communication, but it also helpfully provides clear steps that firms can consider taking, for example, auditing current practice, providing clear and simple information on financial products, properly training staff, and adopting a flexible approach in the application of terms and conditions. It also sets out what "good" looks like and includes case studies of good and bad outcomes for vulnerable consumers.
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By GlobalDataDetailed market research was conducted to assist in the publication of this paper, including interviews with consumers, experts from organisations that represent particular vulnerability groups, front line staff in advice-giving roles and case studies from the Citizens Advice Bureau. This comprehensive research and publication of the paper (which runs to 119 pages) is clearly reflective of the importance the FCA attributes to the issue of consumer vulnerability. What is particularly helpful and will no doubt be well received by firms is the clear identification of problem areas and guidance as to best practice provided by the FCA in this paper. Firms are no longer having to decipher the legal framework without any assistance. However this obviously leaves little room for non-compliance in this area.
