Worried woman with bills and calculator, sitting at kitchen table.
The conflict in the Middle East means cost of living pressures remain top of mind – with people facing increased costs for utility bills, food and fuel.
We want to remind you about our clear expectations on the support you should offer consumers in challenging times, through the Consumer Duty[2] and our rules on protections for borrowers in difficulty[3].
What we expect firms to do
The Duty requires firms to put customers’ needs first and avoid foreseeable harm, including those in vulnerable circumstances. We expect you to have embedded the Duty and to monitor outcomes actively, identifying where consumers are at risk of harm in a rapidly changing environment.
We support our rules and guidance with clear examples of good and poor practice.
Below are some further examples of how firms can apply the Duty and our rules in practical ways.
Products and services
Firms must check that products and services still meet the needs, characteristics and objectives of their target market as circumstances change. This includes checking that product features are not causing harm, including to customers in or approaching financial difficulty, or to those who need extra help.
For example, credit and lending products should provide timely access to customer support. This includes clear triggers to refer customers to specialist teams and a way to agree temporary arrangements before arrears escalate.
Price and value
Firms must regularly review whether customers still receive fair value as circumstances change. Keep monitoring outcomes for higher-risk customer groups and act if you find that a product no longer offers fair value.
If a product or service does not provide or ceases to provide fair value, you must take appropriate action to mitigate and prevent harm, for example, by reducing charges or making changes to improve value or removing it from sale.
For example, a firm charges a monthly fee for a 'support' add-on that customers in financial difficulty can’t access when they need it. As budgets tighten, they pay for little benefit, so it may not be fair value.
If charges are fair, but becoming hard for consumers to afford, we encourage flexibility. For example, if a customer is considering cancelling an insurance policy because of cost, providers should consider whether they can reduce premiums (for example, by reviewing the customer’s risk profile), waive adjustment or cancellation fees, or agree a temporary reduced payment plan.
Consumer understanding
Customers may need clearer, more timely and more prominent information to make effective decisions right now. Some may be experiencing payment difficulties for the first time and may not know what support is available. Firms should test communications (including digital journeys and scripts) to make sure customers understand key terms, the consequences of inaction and the support available.
For example, proactive communications ahead of any foreseeable changes can give that kind of assurance to customers. More broadly, mortgage arrears and possessions remain low, and we don’t expect the same shock in mortgage rates we saw in 2022 and 2023. But people coming off 5-year fixed rates could face sharp rises. It’s encouraging to see firms using early communication ahead of the end of a fixed rate to engage with customers and support those who need help preparing for a rate change.
In insurance, firms should make sure important policy terms and exclusions are highlighted clearly in key communications with customers.
Consumer support
The Duty requires you to keep support accessible and effective as customers’ needs change. For example, call waiting times and transfers shouldn’t create unreasonable friction. Staff should be empowered to recognise vulnerability and take ownership of resolving issues. Firms should offer support through channels that work for customers.
For example, where customers are struggling with repayments, firms can make it straightforward to explore and agree appropriate arrangements to reduce payments. They can clearly signpost or support a referral to free debt advice. Firms should also monitor the outcomes customers get from using different support channels. Plus be mindful of adapting to meet consumers’ urgent needs. This includes making escalation routes for complex cases clear to frontline staff.
What we will be looking for
We will continue to engage with you to deliver good outcomes for customers. We will use our supervisory and, where appropriate, enforcement powers when we see poor outcomes or inadequate action.
Firms should be able to evidence how they are monitoring outcomes and how they are continuing to meet customer needs.
Keep in mind that for those customers who hold multiple products with the same firm, you may need to adopt a holistic view across those products to make sure you are delivering good outcomes.
Next steps for firms
In summary:
- Check that your current approach remains appropriate in the current environment and make changes where it does not.
- Where you identify that foreseeable harm may be caused, we expect timely action and clear evidence of the impact on customer outcomes.
Together, we can help to guide consumers through these uncertain times.