2 Current perspectives in a nutshell… IndustryLots being doneNumerous good practice guides for dealing with different ‘types’ of consumerHead office policies and systems in placeGoodwill amongst staffComplex areaConsumer organisationsNumerous good practice guides & systems may be in placeRecognise there is goodwill amongst FS staffFS staff on the front line not always trained appropriatelyProducts & services not flexible enoughNot always “rocket science”End consumerLack of consistency in approachProducts and services often do not reflect/react to the realities of people’s livesOne poor decision/action can lead to significant detriment
3 What do we mean by ‘consumer vulnerability’? ”A vulnerable consumer is someone who, due to their personal circumstances, is especially susceptible to financial detriment, particularly when a firm is not acting with appropriate levels of care.”(PRR definition)This is our definition but there could be others that fit the bill and they all requires further thought to operationalise.Our approach is based on ‘risk factors’ that increase the chance of vulnerability (though don’t make it inevitable).Give an example.
4 Those who have been vocal on this agenda: Consumer FuturesESAN
5 Outcomes Approach Outcome: More concerned with what “good” looks like to consumers than exact definitions of vulnerability.A best practice, more consistent, approach should be developed for FS marketOutcome:All financial services firms create and put into practice appropriate strategies to address the needs of consumers in vulnerable circumstances.…to make markets work well for consumers so they can get a fair deal & products & services which meet their needs over their lifetime
6 What does good look like?* Firms should have appropriate policies in place to identify consumers in vulnerable circumstancesThere should be a consistent approach within firms.Firms should seek proactively to identify vulnerabilityFirms should put in place policies to approach consumers in vulnerable circumstances in a sensitive and flexible wayVulnerability factored into product design, marketing and service provisionFirms adaptive and empatheticStaff adequately trained to implement policyFirms should be as transparent as possible in their dealings with consumers in vulnerable circumstancesFirms’ policies clear to consumers and consumer organisations* According to consumer organisations who attended our vulnerability roundtable.
7 Why is this on our agenda? It aligns to several of our statutory powers:In considering the appropriate degree of consumer protection, the FCA must have regard to“the differing degrees of experience and expertise that different consumers may have”In considering its competition objective, the FCA may have regard to“the ease with which consumers who may wish to use those services, including consumers in areas affected by social or economic deprivation, can access them”It also aligns to several existing elements of our supervision, for example:FCA Principles 6 & 7- “a firm must pay due regard to the interests of its customers and treat them fairly”.- “a firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading”.
8 Why is this on our agenda? BCOBS requires that the information requirements (elsewhere) in BCOBS- “may vary according to matters such as the information needs of a reasonable recipient having regard to the type of retail banking service that is proposed or provided and its overall complexity, main benefits, risks, limitations, conditions and duration”ICOBS has rules requiring:- customer communications to be clear, fair and not misleading (ICOBS 2.2.2R)- information provided to be appropriate for an informed decision (ICOBS 6.1.5R)- insurers to handle claims fairly (ICOBS 8.1).CONC 8.2.7:A firm must establish and implement clear and effective policies and procedures to identify particularly vulnerable customers and to deal with such customers appropriately.
9 What are we doing about it? Consensus-building with both Consumer and Trade Bodies – what does good look like, problems and issuesEmbedding the concept of vulnerability into different work streams across the FCAProducing an Occasional Paper on consumer vulnerability to be published early next yearImpact of industry behaviourPolicy/practice gapWhat good looks like