Protecting vulnerable consumers in the financial services sector
We are pleased to respond to the FCA’s draft Guidance for firms on the fair treatment of vulnerable customers. Many of the people our advisers see are vulnerable. People most often come to us for help with benefits or debt issues. We advised 100,000 clients with mental health problems in the past 12 months, and this is the most common health issue among our clients. Our advisers saw 175,000 people on a low income - 68% of clients who told us their income.
From our research, feedback from advisers and data from our network of local Citizens Advice, we know that vulnerable people get bad outcomes from financial services and often don’t receive adequate support from firms. Although we’ve come across examples of good support across the sector, we don’t think either this new Guidance or voluntary efforts by financial services firms to improve will be enough to level the playing field for vulnerable customers.
The FCA wants to be confident that the Guidance drives improvements across the industry. However, the Guidance goes on to say that it will not create an additional obligation on firms and they need not follow the Guidance in order to comply with rules or other requirements. We feel that this risks causing confusion to firms as it sends a conflicting message. We think the FCA should adapt this Guidance to include a set of rules on the treatment of vulnerable consumers.
A critical part of supporting vulnerable customers - not included in the Guidance or the consultation questions - is price. Our super-complaint to the Competition and Markets Authority (CMA) about the loyalty penalty had this issue at its heart. It’s not enough for firms to provide good, tailored support to customers. They should also be giving vulnerable customers a fair price.