The Financial Conduct Authority (FCA) has launched a consultation on the proposed guidance for firms on the fair treatment of vulnerable customers.
The guidance establishes FCA’s principles regarding firms dealing with vulnerable customers to ensure they are treated fairly across the financial services sector.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
The FCA said it wants vulnerable customer care to be embedded within each firm’s culture. Businesses that fall under FCA authority will need to understand what the guidance means for their business and customers, and how they are addressing the needs of vulnerable customers.
While there has been significant progress in the treatment of customers in recent years, the FCA believes there should be more consistency across all financial services sectors. The regulatory body pointed out that there remains cases where firms are clearly failing to consider the needs of vulnerable customers, which can result in harm.
Christopher Woolard, executive director of strategy and competition at the FCA, said protecting vulnerable consumers is a key priority for the FCA. “We want to see firms explicitly embedding the fair treatment of vulnerable consumers into their culture. Where we find that firms are not doing enough to ensure that consumers are treated fairly, we will take action.
“Firms need to take particular care to ensure that vulnerable consumers are treated fairly as they may be more likely to experience harm. The guidance should drive improvements across the industry, improving outcomes for millions of vulnerable consumers.”
The guidance will be consulted on in two stages and the FCA is asking for comments on this first stage of the consultation by 4 October 2019.
The motor finance industry came under scrutiny for customer care earlier this year, with an FCA report into the industry highlighting ‘serious concerns’ over commission structures and affordability checks.
Jonathan Davidson, executive director of supervision for retail and authorisations at the FCA, said: ”We found that some motor dealers are overcharging unsuspecting customers over a thousand pounds in interest charges in order to obtain bigger commission payouts for themselves. We estimate this could be costing consumers £300m annually. This is unacceptable and we will act to address harm caused by this business model.
“We also have concerns that firms may be failing to meet their existing obligations in relation to pre-contract disclosure and explanations, and affordability assessments. This is simply not good enough and we expect firms to review their operations to address our concerns.”
