As you’ll probably be aware, vulnerability is a pretty topical issue for the FCA right now.

    The regulator published a guidance consultation last July on the fair treatment of vulnerable customers, and is expected to issue final guidance over the next few months.

    Here are some of the key points from the consultation paper that we expect to be part of the final guidance. 

    The FCA defines a vulnerable customer as:

    “somebody who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care.”

    The regulator states that typically vulnerability comes from one of the following four key factors: health, life events, resilience and capability.

    What the FCA wants to see

    The regulator is expecting firms to embed the fair treatment of vulnerable customers into the company's culture, policies and processes.

    This should help firms protect clients that struggle to protect their own interests, and those that are more prone to behavioural biases that may have a negative impact on their decision making.

    Firms should make sure staff have the required knowledge and skillset to treat vulnerable clients fairly, and that adequate systems and controls are in place to mitigate the risk of harm those clients may face.

    The guidance focuses on the following themes:

    • Recognising vulnerability and responding to client needs
    • The value of sympathy
    • The importance of empowered and knowledgeable staff
    • Addressing communication needs
    What should my firm be doing?

    The draft guidance focuses on the principles underpinning the fair treatment of vulnerable customers, with a particular focus on principle six – customers’ interests.

    The guidance aims to get firms thinking about how they can meet their obligations under these principles by concentrating on the following areas:

    • You should be aware of and understand the nature and scale of the potential vulnerabilities that your clients/target market may face, and how these may impact their needs and overall client experience
    • Embed the fair treatment of clients across your whole workforce, making sure staff have the right skills and capabilities to identify and respond to vulnerable clients and can offer practical and emotional support
    • Make sure the details of a client’s vulnerability are sufficiently recorded, and that products and services consider the potential needs of vulnerable clients
    • Encourage and enable vulnerable customers to disclose their needs to you, and make them aware of the support available
    • Have multiple methods of communication available for vulnerable clients depending on their needs
    • Carry out regular reviews of your processes so that improvements can be made when vulnerable clients’ needs aren’t being met

    The FCA will be following up on firms’ responses to this guidance by supervisory work. As part of this, firms will be expected to demonstrate how their culture, policies and processes ensure the fair treatment of all clients.

    What documents should I be amending?

    The changes to vulnerability are far-reaching and may require you to adapt or update your existing policies and procedures.  

    To meet regulatory requirements we’d recommend you review the following key areas and build your vulnerability processes accordingly:

    • Suitability reports – include changes to templates and file review processes
    • Fact-finds – include additional information gathering sections and any third-party information
    • Registers – create a new recording template
    • Complaints – update and amend how you treat complaints from vulnerable clients
    • Training and competence – include your vulnerability training and testing and update observation and fit and proper requirements
    • Systems and controls – add the process and annual review
    • Financial promotions – identify how you will adapt promotions for any vulnerable clients
    • Insistent clients/execution-only – Review this process and ask yourself if this is still suitable to offer vulnerable clients
    • Fair treatment of customers (treating customers fairly)  – Update and review
    • Product governance – consider how vulnerable clients fit within segmentations and amend or create as appropriate
    • Anti-money laundering (AML) policies and procedures – Make sure AML standards are maintained and reviewed to meet vulnerable needs


    Apricity clients can access vulnerability training and resources as well as a sample vulnerability process through the Apricity system. If you’re not a client, you can click here to sign up for a free 30-day trial.

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