The Financial Conduct Authority (FCA) has launched a second consultation on measures to ensure that vulnerable consumers are treated fairly and consistently across financial services sectors.

The watchdog said it aims to introduce guidance that will provide clarity and focus firms’ attention on what they should do to comply with its principles, thus making sure that fair treatment of vulnerable consumers is properly embedded by firms in their culture, policies and processes.

The deadline for responses to the consultation, which asks about the content of the draft guidance, its costs and its benefits, is 30 September 2020.

FCA interim chief executive, Christopher Woolard, said: “Today’s guidance sets out what firms should do to ensure vulnerable consumers are being treated fairly. We know many more customers will be struggling with their finances as a result of the impact of coronavirus. Supporting vulnerable consumers is a key focus for the FCA, and the coronavirus crisis has only highlighted its importance.

“While many firms do excellent work to support their vulnerable customers, we will not hesitate to step in where others do not.”

The FCA launched the consultation alongside the publication of its Financial Lives 2020 survey, which found that almost half (46 per cent) of UK adults displayed a characteristic that could make them vulnerable.

These characteristics include health conditions or illnesses, low resilience to financial or emotional shock, lack of financial capability, and experiencing life events such as bereavement.

The FCA’s report said these vulnerable customers were more likely to experience financial exclusion, difficulty accessing services, disengagement with the market, scams, exposure to mis-selling and more.

It added that a key challenge for firms was to recognise when a customer is vulnerable and added that empowered and knowledgeable staff could help customers avoid financial difficulty and reduce their distress.

Commenting on the findings, Quilter corporate affairs director, Jane Goodland, said: “The pressure is on for companies, government and charities to tackle this financial vulnerability. A huge challenge when it comes to customer vulnerability is recognition. It may be that the client or customer doesn’t recognise themselves as vulnerable or even omits facts that might help them be identified as such.

“It becomes even harder in a digitised age when people may set up a bank account, pension, ISA etc and go years without speaking to anyone from their financial institution. There needs to be a focus on how we evolve our systems and employee training so they are attuned to even the slightest hint at vulnerability.”

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