Background
The FCA explains that the Consumer Duty sets a high standard for retail consumer protection and that, in light of this, it reviewed a sample of payments firms to assess how they are supporting consumers in vulnerable circumstances and whether they are delivering good outcomes.
Summary
The FCA sets out the following findings:
- Identifying and recording consumers in vulnerable circumstances: The FCA found that firms achieving good outcomes understand the prevalence and drivers of vulnerability within their customer base, identify vulnerable customers throughout the customer journey, and record information consistently using system-based processes. Good practice includes prompting customers to disclose support needs, using data and behavioural indicators to identify vulnerability, embedding identification into digital channels, and testing identification processes. Areas for improvement include overreliance on staff judgement, weak assurance and testing arrangements, inconsistent recording practices, and poor sharing of vulnerability information. Smaller firms do not need sophisticated systems but should still adopt proportionate mechanisms to identify and record vulnerability effectively.
- Supporting consumers in vulnerable circumstances: The FCA expects firms to provide support that reflects customer needs, their role in the customer journey and the risk of harm. Firms demonstrating good practice offer flexible support channels, tailor assistance to customer circumstances and ensure support is applied consistently. Examples include assisted onboarding, multilingual support and testing different support approaches before wider implementation. Some firms also train intermediary staff. However, some firms struggled to demonstrate how support arrangements delivered good outcomes, applied support inconsistently or failed to link vulnerability information to practical actions. Effective support depends on early identification, clear understanding of needs and appropriate interventions.
- Consumer understanding and communications: Firms delivering good outcomes communicate in ways that are clear, accessible and tailored to customer needs. Good practice includes offering communications in different formats and languages, providing alternative channels for customers with limited digital capability, and testing communications with vulnerable consumers, advocacy groups and customer panels. These approaches help customers understand information and make informed decisions. Areas for improvement include excessive reliance on standard communications, limited tailoring for different customer needs and insufficient testing of whether communications are effective in practice. Smaller firms can take proportionate approaches but should use plain language, alternative channels and reasonable adjustments where necessary.
- Governance, management information (MI) and outcomes monitoring: The FCA found that firms delivering good outcomes define what success looks like for vulnerable customers and use MI to monitor outcomes and drive improvements. Good practice includes collecting data on vulnerabilities and customer outcomes, reporting regularly to boards, analysing complaints and trends, undertaking root-cause analysis and testing whether interventions improve outcomes. Some firms incorporated vulnerability metrics into Consumer Duty reporting. Areas for improvement include weak board reporting, limited monitoring of outcomes, inconsistent vulnerability data and excessive reliance on anecdotal examples rather than trend analysis. Strong governance helps firms identify issues early and support continuous improvement.
- Overseeing intermediaries: Where products or services are distributed through intermediaries, firms remain responsible for delivering good customer outcomes under the Consumer Duty. Good practice includes collecting MI on intermediary performance, monitoring complaints and outcomes, providing training and guidance, and challenging intermediaries where necessary. Firms should use information from intermediaries and other sources to understand outcomes for vulnerable customers and address emerging issues. Areas for improvement include limited visibility of vulnerability among customers served by intermediaries, insufficient monitoring of outcomes and weak engagement with third parties. The FCA made clear that oversight should be proportionate but robust enough to identify and remedy poor outcomes.
Next steps
The FCA makes clear that firms should consider the findings and examples in this publication when assessing their own arrangements in order to help identify any improvements needed to deliver good outcomes for customers in vulnerable circumstances.