On 29 July 2020, the FCA published Guidance Consultation 20/3: Guidance for firms on the fair treatment of vulnerable customers (GC20/3).

In July 2019, the FCA published an initial consultation on draft guidance that set out its view of what the Principles for Businesses (the Principles) require of firms to treat vulnerable consumers fairly (GC19/3). The FCA adopted a two stage approach to consulting:

  • First stage: GC19/3 sought views on the aims and content of the draft guidance, the costs and benefits, whether the draft guidance was sufficient to ensure vulnerable consumers are treated fairly or if additional interventions are needed.
  • Second stage: GC20/3 discusses the feedback received to GC19/3 and seeks view on updated guidance (Annex 4).

In terms of feedback on GC19/3 the FCA states:

  • It is not prescribing cross-sector minimum standards as it considers this could result in the unintended consequences of “levelling down” in some sectors due to the differences in services offered, firm size and customer base. The draft guidance provides all financial services firms with different ways in which they can meet the needs of their vulnerable customers and comply with their obligation to treat all customers fairly.
  • The FCA agrees with respondents that effective supervision is important and is planning communications and supervisory work around any finalised guidance to ensure firms are aware of and are generally taking action to ensure the fair treatment of vulnerable customers.
  • The FCA has considered whether the proposed guidance covers the right issues and provides firms with the right degree of clarity on what they should do to comply with their obligations under the Principles. The FCA has sought to clarify the guidance by replacing some examples and case studies where they were unclear. The FCA has also refined descriptions of what firms should do.
  • The FCA has clarified the scope of the guidance. The case studies and examples provided in the draft guidance do not seek to cover every business model or scenario and firms will need to use their own judgement on what the guidance means for them.

The deadline for comments on GC20/3 is 30 September 2020. Pending the responses to the consultation the FCA plans to finalise the guidance later this year or early 2021.