It is worth noting that the FCA has not - and will not - make specific rules to address each area of vulnerability , but instead establishes the responsibilities within its principles for all firms .
In its most recent activity , the regulator reinforces the importance of embedding the fair treatment of vulnerable consumers within a firm and that all relevant staff should understand how their role affects the fair treatment of vulnerable consumers .
In a call to action , the regulator says that to achieve good outcomes for vulnerable customers , firms should :
• understand the needs of their target market / customer base
• make sure staff have the right skills and capability to recognise and respond to the needs of vulnerable customers
• respond to customer needs throughout product design , flexible customer service provision and communications
• monitor and assess whether they are meeting and responding to the needs of customers with characteristics of vulnerability , and make improvements where this is not happening
What impact will the Consumer Duty have on vulnerable client processes ?
‘ A New Consumer Duty ’ ( Consultation Paper CP21 / 13 ) highlights a number of key areas in financial planning ; consumer protection , how manufacturers and distributors build and distribute products and services , product governance and how firms charge consumers , to name but a few . However , the FCA ’ s desire to ensure the fair treatment of vulnerable clients is not only a stated objective of CP21 / 13 , but also a principle which is woven throughout the entire document .
The Consumer Duty will include a new Principle ( Principle 12 ), and a suite of other rules and guidance , and would reinforce the existing Handbook . It is expected that firms ensure vulnerable consumers benefit from the overall improvements in outcomes delivered as a result of these proposals .
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It is worth noting that the FCA has not - and will not - make specific rules to address each area of vulnerability , but instead establishes the responsibilities within its principles for all firms .
Equality and diversity considerations
In its work outlining the responses it had receive to CP21 / 13 , the FCA noted that it was keen that firms “… should be aware that particular groups of customers , for example who share different demographic characteristics such as age , race , socioeconomic background or characteristics of neurodiversity may have or be more likely to have characteristics of vulnerability ”.
Considerations around a firm ’ s approach to diversity in terms of vulnerable clients are particularly important where groups sharing protected characteristics ( as defined in the Equality Act 2010 ) may be disadvantaged . Firms will need to satisfy themselves - and be able to evidence - that they fully meet the standards required by the Consumer Duty for all its customers .
At the centre of the Consumer Duty guidance lies a simple suggestion ; that an adviser should treat a client in the way that they themselves would wish to be treated . Whilst this is the approach that the vast majority of advisers already follow in principle , the practicalities of identifying , raising and discussing areas around vulnerability can sometimes be uncomfortable in practice . Despite the hardships we ’ ve all faced over the past few years , we ’ re hopeful that one positive might be that recognising and talking about the way we and others feel has become more natural . Check in with your clients as you would want your adviser to do with you , record what they say and follow the necessary processes , and you ’ ll be on target to meet the regulator ’ s requirements .
You can speak to our compliance helpdesk at any time on 01484 439120 . Are you looking for more support ? Our Business Consultancy Team can work with you to ensure that you are prepared for the arrival of the Consumer Duty . Call us today on 01484 443419 or email us at bc @ simplybiz . co . uk to find out how we can help .
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