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FCA to help firms identify vulnerable consumers

Crossroad signpost saying this way, that way, the other wayThe FCA has told MPs it will elaborate how firms should identify vulnerable customers in guidance to be published in the near future.

In July 2018 the FCA published a discussion paper on duty of care in financial services and potential approaches that closed last November.

Earlier this month the watchdog published an update saying it is reviewing the findings and will publish guidance about the direction of any potential new duty.

Currently the Treasury select committee is looking into whether certain groups of consumers are excluded from financial services as part of inquiry into the topic.

Today lawmakers on the committee asked senior policymakers at the FCA to give more details about what its forthcoming guidance might contain.

Specifically Labour MP Wes Streeting asked what expectations the watchdog has of financial service providers to identify vulnerable clients.

Giving evidence to the committee FCA director of consumer and retail policy Nisha Arora said: “Identification is one of the biggest challenges firms encounter and we [the FCA] will be covering that in our guidance to firms shortly.

“Sometimes consumers will disclose their own vulnerability but our research shows the reasons why they might not disclose sensitive details.

“For instance they might be unaware they are vulnerable, could fear the consequences of disclosure and there is a lack of trust in the financial services industry.

“On the other hand I would not expect a firm to understand the vulnerabilities of every consumer but we think firms need to have practices and policies in place to help identify vulnerable consumers.

She adds: “We have seen good examples of that such as training front line staff to help people. Firms are starting to use data analytics and introduce more touch points into a relationship to help consumers along their journey.

“We have seen firms do good practice but we want to see them do more of that and will encourage it in our forthcoming guidance.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Some guidance would certainly help.

    Hopefully FOS will take notice.

  2. DRN2074010 is a case which gives some insight into the FOS view on this.

  3. It would also be helpful if the FCA would not only issue guidance but also in terms of ‘what to do’ when facing suspicious situations where even lawyers (yes, those trusted professionals) appear to have compromised interests in the matter!

  4. How you deal with vulnerable clients is very important, and may I say nothing new.
    A lot, like most things, comes down to experience and common sense.
    Identifying, knowledge, understanding and objectives of a client, is a process, any inconsistencies in these could well mean they will or may be vulnerable to agreeing to any recommendations you give
    Having a family member, or an independent third party present at each and every meeting is a must.
    Ignorance may not be as blissful as one may think ?

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