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News for Members

15 March 2015

Consumer Vulnerability - Summary of FCA Guidelines

The FCA's latest Occasional Paper on Consumer Vulnerability aims to help the financial services industry to identify consumers who are in potentially vulnerable circumstances and to tailor their services accordingly.  We've summarised the key points in order to help CCA members to recognise the issues and to adopt best practice when serving these consumers. 

What is a vulnerable consumer?

According to the FCA, a vulnerable consumer is:

Someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.

Why it matters

The long term nature of commitments, the move to online and remote offerings and the complexity of products and information means that vulnerable people may find interaction with the financial services market particularly challenging. Firms need to ensure that they adapt to the changing circumstances that real life creates by designing their services to be inclusive.

Implementing an inclusive strategy that aims to make services available, usable and accessible to all, regardless of personal circumstances, will lead to better performance for everyone in the longer term and, arguably, greater levels of consumer satisfaction across the board.

Problem Areas

The FCA's research confirmed that there are problems at every stage from high level policy, through system design, to the products themselves and the way that they are sold:


  • Many firms lack a strategy or policy on consumer vulnerability
  • Policies designed to prevent financial abuse and fraud may inhibit staff from using discretion, particularly regarding legitimate access by third parties



  • Failure of internal systems to communicate information eg. consumers may have to tell firms about a bereavement multiple times
  • Interfaces or channels of communication may not be inclusive
  • Increasing automation (eg call centres) may create challenges



  • Inflexible products which are designed for a standardised 'perfect' consumer
  • Product and information complexity and confusing communications
  • Lack of suitable and affordable products for people in non-standard situations
  • Lack of solutions for temporary delegation ie enabling a family member to manage your affairs for a short time



  • Policy/practice gaps where frontline staff are not aware of head office policies
  • Consumer time is not valued highly enough - if a consumer is in a stressful situation the process may be considered to be too time consuming
  • Inconsistent approach around flexible temporary forbearance
  • Arrangements around temporary delegation and accompaniment are not sufficiently developed or flexible enough
  • Inappropriate selling and sales practices which exploit behavioural biases
  • Issues around disclosure of vulnerability and data protection


What can firms do?

Firms have the power and capacity to create good outcomes for the customer by developing effective strategies and managing interactions more efficiently.  Key areas for firms to explore include:

  • Begin by auditing current practice
  • Implement a high level policy to ensure that a consistent approach is embedded across all operations
  • Make sure that all staff are aware of the policy
  • Conduct regular evaluation on the effectiveness of the vulnerability policy
  • Ensure that frontline staff are trained sufficiently to facilitate a proper conversation and understand where internal expertise lies
  • Increase flexibility in terms and conditions for products and services to ensure that the needs of vulnerable consumers are met
  • Introduce a process for referring consumers on to specialist teams who have authority to make flexible decisions
  • Establish good policies and practice for handling disclosure and communication
  • Ensure that clear, simple information and explanation is provided throughout the product lifecycle
  • For data protection, make sure that staff are trained so that policies are not applied in an overzealous manner


What does 'good' look like to consumers?

The FCA's research has identified that consumers in vulnerable circumstances need to experience the following outcomes from financial services providers.  Many of these would also be beneficial to all consumers:

  • Financial products that are clear and easy to understand
  • A choice of communication methods for making contact eg. audio/braille/face-to-face
  • A feeling of being treated as an individual
  • Knowing that if a change of circumstances occurs, a flexible and tailored response will be offered
  • Being able to talk to someone who will take time to listen and will be trained to spot signs of vulnerability
  • If information is disclosed, it will be recorded properly
  • Knowing that firms will proactively contact you if they suspect you are in financial difficulties
  • Knowing that appropriate action will be taken if abuse or fraud is suspected
  • If you are recently bereaved, have a power of attorney or a third party mandate, receiving consistent advice and treatment


To access the full contents of the FCA's Occasional Paper, including case studies, tips from firms and an invaluable Practitioners' Pack, visit the FCA website.

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