FCA Publishes Findings on Firms’ Treatment of Consumers in Vulnerable Circumstances

In 2021, the FCA issued guidance to help financial services firms support consumers in vulnerable circumstances. The Consumer Duty, introduced in 2023, requires firms to deliver good outcomes for all consumers, including those in vulnerable circumstances.

On 7 March 2025, the FCA published a review, along with good and poor practice examples, to further help firms provide an appropriate level of care (to vulnerable customers) that is also consistent with the Consumer Duty. This alert summarises the FCA’s key points.

Who is a vulnerable consumer?

The FCA’s Financial Lives Survey (2022) identifies certain characteristics and indicators of vulnerability associated with the four drivers of vulnerability, extracted below. 

Figure 1. The drivers and characteristics of vulnerability defined by the FCA’s Financial Lives Survey.

As referenced, vulnerability sits on a spectrum and how firms define vulnerability will need to be tailored to their target market.  

Key Expectations

The FCA’s findings are framed against the following key expectations under the Consumer Duty:

• Governance and Outcomes Monitoring. Firms that effectively monitor outcomes for consumers in vulnerable circumstances tend to set out what a good outcome for a particular product or service looked like. Understanding the depth of monitoring required enabled firms to collect the relevant data to make an evidence-based assessment of their consumers’ experiences. However, some firms were not able to demonstrate how they use this data to identify areas for improvement and to effectively escalate an issue where poor outcomes are identified. Ensuring that there is genuine engagement by senior leaders – rather than only in theory – will improve the quality and cohesion of a firms’ approach to vulnerability from a governance and outcome monitoring standpoint.
• Consumer Support. Firms that provide effective consumer support tend to take steps to identify signs of vulnerability and actively encourage consumers to disclose their needs. A centralised system that stores consumer information will enable colleagues across the firm’s retail business areas to access vital support details, avoiding the need for consumers to repeat sensitive information. In addition, it is imperative to empower frontline staff to support consumers in vulnerable circumstances. 88% of firms reported taking a variety of actions, such as adjusting performance targets related to call times and volumes of cases. Nevertheless, the consumer research suggested that firms are failing to respond flexibly to consumers’ needs. Only 58% of consumers said that their provider made changes as a result of disclosing their circumstances. Firms need to ensure that they can adapt standardised processes (where appropriate) to deliver good consumer outcomes.
• Consumer Understanding. To best ensure consumer understanding, communications should be clear, consistent and written in plain English. The timeliness of communications is particularly important for consumers in vulnerable circumstances because it empowers them to plan ahead and make an informed decision at key points in the consumer journey. Tailoring communications will enhance the accessibility of information for consumers. For example, consumers with health conditions reported that some firms were able to adapt to their particular needs, including providing video calls with sign-language and enhanced mobile apps. Despite firms providing clear and timely communications, consumer testing was a less commonly taken action. Testing communications on an ongoing basis will allow firms to assess whether their communications meet the needs of consumers in vulnerable circumstances.
• Products and Services. The review showed that firms are yet to make significant progress in product and services design. Few firms are training product and service design staff on vulnerability – and training is not covering (often enough) how their role can affect consumers in vulnerable circumstances. Firms also need to incorporate data and insight about vulnerability, related to their consumer base and target market, into their product design and review processes. Only 29% of firms said they tested the impact a product or service has on consumers with characteristics of vulnerability and whether the product meets the needs of such consumers in their target market. If firms focused on getting it right at the design stage, especially with the challenges that digitalisation presents to consumers with vulnerable circumstances, it would inspire greater confidence in consumers’ needs being met.

Conclusion

Whilst the FCA found that many firms had taken positive action, some areas of improvement remain, particularly around products/services and outcomes monitoring. Therefore, firms should review the FCA’s findings and evaluate how they capture, monitor and adapt to vulnerability against the regulator’s expectations – to ensure that firms deliver good outcomes for consumers in vulnerable circumstances.

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