On 23 July 2019, the FCA launched a consultation on proposed guidance for firms on the fair treatment of vulnerable customers. The draft guidance sets out the FCA’s view of what the FCA Principles for Businesses (Principles) require of firms to ensure that vulnerable consumers are consistently treated fairly across financial services sectors.

The FCA states that there are two stages of consulting on the draft guidance.

The first stage involves publishing the draft guidance for consultation and seeking feedback by 4 October 2019 on three particular areas:

  • whether the draft guidance covers the right issues and provide firms with the right degree of clarity on what they should do to improve outcomes for vulnerable consumers;
  • how the guidance could affect firms’ costs and the extent of benefits to vulnerable consumers from changes triggered by the guidance; and
  • whether the guidance, as part of the FCA’s regulatory framework, is sufficient to ensure firms take appropriate action to treat vulnerable consumers fairly, or whether stakeholders consider that the FCA needs additional policy interventions, such as additional rules to ensure this happens.

The draft guidance sets out the FCA’s definition of vulnerable consumers, the scale of the issue, and the potential impact on consumers of being vulnerable. The FCA explains why vulnerability is a key concern for it, and summarises the engagement work it has carried out while developing its policy thinking. The FCA also discusses how the proposed guidance fits in with the relevant external environment in which firms operate. The FCA also explains the aims of the guidance, what it includes and how it expects firms to use it. Additionally, the FCA outlines how it will hold firms to account if they breach the Principles and how it will monitor the effectiveness of the guidance. The FCA also explores how the guidance fits with other regulatory requirements.

The second stage will involve the FCA assessing the feedback from stage 1. In light of the feedback, the FCA plans to consult on revised draft guidance, publishing a cost-benefit analysis alongside it. If the FCA considers further intervention is necessary, it will also consult on these in the second stage.