The Financial Conduct Authority (FCA) has today announced it is retaining its existing definition of vulnerable consumers in response to its Consumer Approach consultation, with new guidance on vulnerability set to be published next year. The consultation, which was launched in November last year, proposed a new definition for vulnerable consumers. A range of organisations including the Money Advice Trust raised concerns that the proposed new definition presented a potential step backwards for the vulnerability agenda, with a shift in focus towards the consumer and away from the actions of financial services firms.
The FCA has outlined the measures it will take to protect consumers and sets out when and how the organisation takes action. The Approach to Consumers document published today sits alongside a new discussion paper on a Duty of Care and taken together are intended to ensure there are no gaps in protection for consumers in the financial sector.
Andrew Bailey, Chief Executive at the FCA, said ”Consumer protection is absolutely central to the FCA’s purpose and Mission. Nearly everyone at some stage in their life will come into contact with a financial organisation and people need to know that they are being treated fairly and that the right protections are in place. Different groups of consumers have different financial needs, which will naturally change over their lifetime.”
“As we have demonstrated in the past we will act to address harm or potential harm using the range of powers and tools at our disposal to protect consumers. To ensure we provide the necessary protections and deliver good outcomes for consumers we need to regularly review our approach, so we can reflect the diverse population of the UK and consumers’ changing needs in a rapidly-evolving and increasingly complex environment. The papers published today are part of this continuing work.”
Responding to the publication today of the Financial Conduct Authority’s consumer approach, Peter Tutton, head of policy at StepChange Debt Charity, said “Through our work we see the crucial importance of financial service firms putting the needs of their customers at the heart of everything they do; whether this is giving people in financial difficulty the right help at the right time, or making sure people who need more support get the products and a service that match their circumstances. So clear guidance and direction from the Financial Conduct Authority is both welcome and necessary.”
“We know that people with additional vulnerabilities are more likely to be on lower incomes, to be behind on their household bills, and do not have enough money to make ends meet. There is a pressing need for Government to look for ways to improve the financial health and resilience of households and people with additional vulnerabilities.”
Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline, said “The FCA’s decision to retain its existing definition of vulnerable consumers is the right approach and shows that vulnerability remains an important priority for the regulator. I am pleased that the FCA has listened to the concerns we raised as a sector about the proposed change.”
“From our work training creditors in this area, we know there is a growing appetite from many organisations to further improve their processes and training of frontline staff to better support vulnerable customers.”
Eric Leenders, Managing Director, Personal Finance at UK Finance said “We support the FCA’s vision for a functioning market that works well for customers. At UK Finance we are delivering a significant programme of work to serve customers better, centred around the Vulnerability Taskforce report published in 2016. We look forward to working closely with the FCA as they develop their approach to consumers. We will also work with them as they consider the potential introduction of a duty of care, alongside possible alternatives, to better understand how it would support the combination of strong regulatory and voluntary customer protections that are already in place.”
“With this continued commitment to vulnerability, the industry is in a strong position to build on the progress already made by many firms in their support for customers in vulnerable circumstances. We look forward to continuing to work with the FCA, creditors and partners across the sector to ensure customers receive the right support they need.”