See examples of good practice and areas for improvement to help your firm support customers in vulnerable circumstances.
See examples of good practice and areas for improvement to help your firm support customers in vulnerable circumstances.
In February 2021, we published FG21/1, 'Guidance for firms on the fair treatment of vulnerable customers[2]' (the Guidance).
We introduced the Consumer Duty[3] in July 2023, which raised standards, requiring firms to act to deliver good outcomes for all customers, including those in vulnerable circumstances.
Last year, we set out to evaluate firms’ treatment of customers in vulnerable circumstances. This report sets out our findings on good practice and areas for improvement.
We have also published our review of firms’ treatment of customers in vulnerable circumstances[4].
We are publishing this work as part of our ongoing commitment to share more information on how firms are embedding the Consumer Duty, so firms can learn from the good practice and areas for improvement we have seen.
We gathered data and insight from firms and consumers and engaged with key stakeholders to explore firms’ treatment of customers in vulnerable circumstances. This included:
This report sets out examples of good practice and areas for improvement so that firms can learn how others are supporting customers in vulnerable circumstances under the guidance and the Consumer Duty.
There is no one-size-fits-all approach. The approach that firms take will differ according to their business model, size and customer base.
We have set out our findings against key expectations and requirements under the Consumer Duty:
A small number of firms used data effectively to identify where customers in vulnerable circumstances were experiencing worse outcomes than others.
We saw examples of firms delivering flexible and tailored support, strengthened by training frontline staff on how to support customers with characteristics of vulnerability.
We saw firms take steps to review and improve the clarity of their messages to customers, tailor communications, and provide these in a timely manner to make sure customers understood product information.
Some firms incorporated feedback from lived experience panels and focus groups into their development processes, and considered how customers in vulnerable circumstances used their products as part of product reviews processes.
Most firms in our multi-firm work into outcomes monitoring were unable to show how they effectively monitor and take action on outcomes for customers in vulnerable circumstances. This includes:
Some firms failed to:
We saw examples of firms not providing appropriate or accessible channels to customers in vulnerable circumstances, and a lack of testing of consumer understanding.
Most firms we engaged with could not show us how they had embedded the needs of customers in vulnerable circumstances into their product and service design processes.
We also saw a lack of training on vulnerability for product and design staff.
Under the Consumer Duty, firms must:
Where a firm chooses to outsource elements of its consumer support to a third party, it should have systems and controls in place to monitor and provide assurance it is meeting regulatory obligations.
Firms should act where they identify that any group of retail customers are receiving worse outcomes than another group for the same product.
Under the Guidance, to measure and ensure that customers in vulnerable circumstances are receiving outcomes as good as those for other customers, firms should:
Both the Guidance and the Consumer Duty provide examples of the types of management information (MI) firms could collect to monitor outcomes.
We saw that firms doing best at monitoring outcomes tend to:
Firms that could effectively monitor outcomes for customers in vulnerable circumstances tended to set out what a good outcome for a particular product or service looked like. This helped support and structure how firms monitor whether customers receive good outcomes.
Firms who collected relevant data to make evidence-based assessments of their customers’ experiences were better able to understand whether they were delivering good outcomes. They could then use this to inform their approach to improving outcomes.
Some firms proactively reviewed customer experience and outcomes. Where outcomes monitoring tended to be better, firms acted where they saw poor outcomes, responding flexibly to customers’ circumstances.
Such firms escalated issues to senior leadership, adapted processes as needed, and evaluated the impact of their interventions.
Some firms’ senior leaders set clear, consistent strategies across business lines, giving appropriate priority to the delivery of good outcomes for customers in vulnerable circumstances. Those leaders also engaged with key management information (MI) and decision-making.
Our firm survey showed 79% of respondent firms said their senior leadership had active involvement such as reviewing governance arrangements, processes and systems. And 70% said their senior leadership was responsible for delivering good outcomes for customers in vulnerable circumstances.
We saw that genuine engagement by senior leaders – rather than only in principle – improved the quality and cohesion of a firm’s approach to vulnerability, and the prominence of vulnerability in firm culture.
While the Consumer Duty has focused firms on this area, most firms were unable to effectively monitor outcomes for customers in vulnerable circumstances.
This aligns with findings in other work on Consumer Duty Board Reports[5] and our multi-firm review of life insurers’ bereavement claims process[6].
We saw the following as key areas for improvement:
Several of the larger firms we engaged with as part of our multi-firm work on outcomes monitoring – including some retail banks and building societies – were undergoing transformation programmes to improve their outcomes testing and monitoring. This is a positive step, but as they are still in progress, we could not assess the effectiveness of these improvements.
What we have seen indicates that firms either find it challenging to monitor outcomes for customers in vulnerable circumstances, have underestimated the depth of monitoring required, or choose only to monitor readily available data. For example, data on whether staff have handled customer calls in line with the firm’s processes, which does not directly measure customer outcomes.
Firms could not always show a clear understanding of the needs and characteristics of customers within their target market and a clear vision for what good looks like for customers with different or additional needs.
In our multi-firm work on firms’ outcomes monitoring, we found firms often relied on data that lacked breadth and granularity. This limited their ability to compare and reach conclusions about outcomes of different groups of consumers.
In our firm survey, respondent firms told us they frequently used MI on:
Far fewer respondent firms said they were using:
These wider sources of data may help firms understand the experience of customers in vulnerable circumstances, including how they use products and the potential harms they face.
In our multi-firm work, firms often monitored outputs of processes – such as call metrics, time taken to transfer funds (eg in bereavement cases) and staff training records. But this alone may not give a full understanding of the outcomes for customers in vulnerable circumstances.
We also saw that firms had gaps in data from distributors and third parties in their distribution chains – or that this MI was less developed. This limited firms’ understanding of customer outcomes across the distribution chain.
Firms were not always able to demonstrate how they use data to identify areas for improvement and establish clear and effective escalation processes where poor outcomes are identified.
It was often hard to see when or how escalations would happen in response to poor outcomes for customers in vulnerable circumstances, due to unclear policies, processes and thresholds for taking action based on ongoing outcomes monitoring.
Many firms pointed to actions they had taken to make improvements for customers in vulnerable circumstances. But we saw limited evidence of firms consistently reviewing the effectiveness of actions.
While firms evidenced interventions to improve individual customer outcomes, they often did not consider improvements across the whole product or service.
Our firm survey found that most respondent firms had established organisation-wide vulnerability policies. But only 39% of firms had formal governance bodies or committees that oversee and can influence outcomes for customers in vulnerable circumstances.
We saw that firms with such mechanisms tended to have more effective approaches to measuring and responding to outcomes for customers in vulnerable circumstances. Such mechanisms tended to indicate the presence of more comprehensive and firm-wide vulnerability strategies.
Firms may want to consider what forms of governance are appropriate for their size and business model. And, where they do put governance bodies and committees into place, they should consider how much impact these have on the fair treatment and outcomes of customers in vulnerable circumstances.
Smaller firms in particular may not find committees or multi-layered approaches appropriate for their business. They may want to consider how else they can oversee and influence outcomes for customers in vulnerable circumstances within simpler business structures.
Where firms are struggling with outcomes monitoring, firms may wish to consider the example and prompts below to develop meaningful management information (MI) to monitor outcomes effectively.
In this example, a mortgage intermediary clearly defines good customer outcomes, actions to achieve those outcomes, and monitoring to inform its approach.
Where firms are struggling to monitor outcomes for their customers in vulnerable circumstances, they may consider some of the below prompts to understand what 'good' looks like for customers and how to test this.
Under the Consumer Duty, the ‘consumer support’ outcome rules set overarching requirements about how to support customers.
Firms should read these with other rules that cover specific elements of customer service, such as our rules on dispute resolution: complaints (DISP)[7].
Firms must:
Under the Guidance, firms should:
We found that the firms that provided consumer support that effectively meets the needs of customers in vulnerable circumstances tend to:
In our multi-firm work on power of attorney (PoA) and bereavement customer journeys in retail banks and building societies, we found that most firms were taking steps to identify signs of vulnerability and encourage customers to disclose their needs.
We saw several examples of good practice:
Of the firms that responded to our survey, 88% reported taking full or strong action to make sure staff understand how their role affects customers in vulnerable circumstances, and to make sure frontline staff are trained to recognise and respond to vulnerability.
Through our multi-firm work on outcomes monitoring and our multi-firm work on PoA and bereavement customer journeys, we identified examples of good practice:
The positive experiences identified in our consumer research tended to come where firms provided tailored support that responded flexibly to customers’ needs. This included adapting standardised processes where appropriate to deliver good consumer outcomes.
Our consumer research showed that most consumers who disclosed their circumstances to their provider reported a positive experience. Of those that disclosed their circumstances to their provider, 74% agreed that the provider asked the right questions following disclosure.
In our review, we saw some firms failing to:
We found that taking steps to identify signs of vulnerability and encourage customers to disclose their needs was challenging for most firms. In particular, we saw this in firms that have primarily digital customer journeys.
Our multi-firm work on outcomes monitoring highlighted that a small number of firms, predominantly in the wealth and asset management sector, had identified zero or very few customers in vulnerable circumstances. This is consistent with our 2023/24 Wealth Survey, which found that 24% of portfolio managers with retail clients and 49% of firms with stockbroking retail clients failed to identify any customers in vulnerable circumstances.
According to our consumer research, only:
Consumers may choose not to disclose for different reasons but where relevant, firms should take active steps to encourage consumers to share information about their circumstances or needs.
Where consumers did disclose, some reported having to do so repeatedly because their provider failed to make appropriate adjustments.
In our multi-firm work on PoA and bereavement customer journeys, we found that call handlers in some firms were not using their firm’s systems to check the information recorded on a customer’s circumstances or needs. In some cases, this meant appropriate support was not provided, putting customers at risk of receiving poor outcomes.
In our multi-firm work on PoA and bereavement customer journeys, we saw some firms adhere rigidly to standardised processes for PoAs and fail to respond flexibly to customers’ or customer representatives’ needs.
For example, in some instances, staff did not tailor their approach for acutely distressed representatives.
In other instances, inflexibility in processes led to staff making unsuitable suggestions or requests. For example, a customer was required to visit a branch to verify their identity when this was not feasible. This could leave some customers without access to bank accounts and vital funds.
We also found evidence indicating limitations in the skills and capability of frontline staff and in some firms’ systems capabilities.
In our consumer research, some consumers described feeling like their provider did not understand or empathise with their circumstances. Of the consumers who disclosed their circumstances:
Some consumers were transferred to several call-handlers before receiving the support they needed. This made some consumers feel discouraged from disclosing their circumstances.
Under the Consumer Duty, firms must:
Under the Guidance, firms should:
During this review, we saw that firms best supporting consumer understanding tend to:
Most firms reported taking action to provide communications in plain English and minimise jargon.
Some firms made written communications and information easier to understand by applying readability and plain numbers checks.
Timely communications are important to give consumers in vulnerable circumstances enough time to fully consider the information they need to make informed decisions at key points in the customer journey.
Of the firms that reported taking significant action to improve communications, 90% said they had taken steps to provide communications in a timely manner and at appropriate touchpoints in the customer journey.
Our consumer research highlighted the importance of tailoring communications to the needs of consumers and avoiding one-size-fits-all approaches.
In our firm survey, many firms told us they provide tailored communications to their customers where necessary. This included enabling consumers in their target market and existing customers, including those in vulnerable circumstances, to access information through communication channels that met their needs.
Consumer research respondents provided examples, such as:
Firms that demonstrated best practice used consumer testing or third-party reviews to assess whether their communications met the needs of consumers in vulnerable circumstances. They used this insight to make changes.
They also periodically test their communications on an ongoing basis.
Although we saw some good practice in the areas specified above, we also saw areas for improvement:
Our consumer research found that consumers in vulnerable circumstances (15%) were more likely than others (13%) to report that they had failed to get the information they needed from firms. For consumers with a combination of poor health, negative life events and low resilience, this figure increased to 32%.
Our consumer research found that a greater proportion of customers in vulnerable circumstances (16%) reported a slow response to enquiries compared to other customers (11%).
Timeliness can be subjective and customers’ expectations may vary. For example, where their circumstances create a heightened sense of urgency, such as when a customer needs to pay a bill. It’s important for firms to consider this in their approach to communications.
The consumer research found a number of negative outcomes were caused by firms not communicating in a timely way. These included consumers not being able to plan ahead and feelings of low self-worth.
These findings demonstrate the importance of timely communication to good consumer outcomes.
In our consumer research, customers in vulnerable circumstances were less likely than others to say their financial service provider’s communication channels met their needs. This applied across all main drivers of vulnerability and was particularly pronounced for those who had low confidence in managing their money.
Chart
Data table
Chart showing the percentage of UK adults who find financial service provider’s communication channels met their needs, answering ‘excellent or good’.
In line with this, FLS 2024 found that 61% of customers in vulnerable circumstances felt there are suitable ways to contact their financial services provider, compared to 72% of other customers not in vulnerable circumstances.
Further to this, consumers with multiple characteristics of vulnerability were more likely to have difficulty interacting with financial services providers.
Under FLS 2024, the 4 drivers of vulnerability are poor health, negative life events, low resilience and low capability.
At least 51% of UK adults with characteristics under all 4 drivers of vulnerability found dealing with customer services on the phone difficult and confusing specifically because of their health condition(s) or illness(es), compared to:
Chart
Data table
Chart showing the percentage of UK adults who find dealing with customer services on the phone confusing and difficult due to health condition(s) or illness(es), by number of vulnerabilities (2024).
These figures indicate that tailoring communications and providing a choice of channels might better meet consumers’ needs. However, firms were not always able to show how they did this.
Areas for improvement included:
Testing the relevance, clarity and timeliness of communications is likely to help firms to ensure consumers in vulnerable circumstances understand the information they need to make decisions in their best interests.
Despite this, our firm survey found that consumer testing was a less commonly taken action.
Where appropriate, firms must test their communications before sharing them with customers, to identify whether they are supporting good outcomes. They should also monitor their communications to check whether they are effective.
If communications are found to be leading to poor consumer outcomes, firms should take remedial action and continue to monitor whether outcomes improve.
Under the Consumer Duty, firms must make sure the design of products:
Under the guidance, firms should take customers in vulnerable circumstances into account at all stages of the product and service design process, to ensure products and services meet their needs. This includes:
Firms should use their understanding of vulnerability within their target market and customer base to support their product and service design process, considering the potential positive and negative impacts of a product or service on customers in vulnerable circumstances.
Firms should design products and services to avoid potential harmful impacts, as well as making sure products and services meet the needs of customers in vulnerable circumstances.
They should ensure all relevant staff have the appropriate skills and capability, as well as support from appropriate systems and processes, to understand and take into account the needs of customers in vulnerable circumstances in their work. This includes product and service design staff.
Our review shows that firms are yet to make significant progress in product and services design. Firms should consider this as a focus area as they continue to embed the Consumer Duty.
We have seen some examples of good practice, including:
It was positive to see some firms looking at how customers in vulnerable circumstances are using products, as part of product reviews.
We saw the following areas for improvement.
Few firms are training product and service design staff on vulnerability – and training is not covering often enough how their role can affect customers in vulnerable circumstances.
Firms were often not able to show how they are designing products and services (or reviewing existing products) to make sure they meet the needs of customers in vulnerable circumstances.
Firms need to do more to incorporate data and insight about vulnerability in their customer base and target market and customer outcomes into their product design and review processes.
In our firm survey, we asked firms to tell us about the vulnerability-related training they have available for staff.
Just over half (54%) of respondent firms who told us they have training in place for non-frontline staff answered that training or internal guidance for those staff included how vulnerability is relevant to their specific role and how to implement this in practice.
This may indicate that product and service design staff rarely receive vulnerability training. When they do, it is likely to be insufficient to help them consider vulnerability in their role and processes.
More than 85% of firms in retail markets that took part in our survey indicated they had taken significant action to consider the needs of customers in vulnerable circumstances throughout the product and service design process.
But looking more closely at firms’ specific actions on key aspects of the Guidance, the numbers of firms taking action were low. For example, only 29% said they tested the impact a product or service has on customers with characteristics of vulnerability and whether the product meets the needs of such customers in their target market.
Where we saw real examples – for instance, as part of our outcomes monitoring multi-firm work – they were often short on detail, providing little assurance that sufficient action had been taken.
The experiences reported by customers in vulnerable circumstances show they still struggle to find products and services that meet their needs.
Our consumer research suggested that certain groups of customers in vulnerable circumstances, compared to other customers, were less likely to agree that:
Chart
Data table
Chart showing the percentage of UK adults who agree it was easy to find suitable financial services products and services. Customers in vulnerable circumstances are less likely to agree.
Chart
Data table
Chart showing the percentage of UK adults who agree they understand which products are designed to meet their needs. Customers in vulnerable circumstances are less likely to agree.
Chart
Data table
Chart showing the percentage of UK adults who agree they can take out financial services products that meet their needs. Customers in vulnerable circumstances are less likely to agree.
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