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FG21/1
Chapter 2
Financial Conduct Authority
Guidance for rms on the fair treatment of vulnerable customers
Case study: poor practice – failing to understand a changing need
A consumer with a mental health condition tried to become an advocate for
his partner so he could manage his current account while his partner was ill. He
expected to be able to look after his partner’s financial affairs temporarily, until
he was well enough to look after them himself. He made several calls with little
progress and found it stressful and frustrating to have to prove he had permission
to speak on behalf of his partner and repeat the story every time. There was no
one point of contact or specialist team to deal with. The experience was in direct
contrast to his own bank with whom he has had good experiences in relation to
his own needs.
Failing to recognise and respond sensitively to a customer’s needs can have
a direct impact on the customer’s engagement with financial services and, in
turn, on how they manage their financial affairs.
e. Over-indebtedness: consumers with characteristics of vulnerability are more likely
to fall behind on key household bills or credit commitments. Being over-indebted
may also be linked with experiencing mental health conditions or addictions. The
Money and Mental Health Policy Institute have reported that nearly half of all
consumers in problem debt also have a mental health problem. People with problem
debt are also twice as likely to develop major depression as those who are not. Life
events such as bereavement, relationship breakdown and ill health can contribute to
temporary loss of income and greater risk of debt.
Case study: mixed practice – customer service
A consumer became overdrawn due to financial difficulties and had payments
refused. The consumer asked her bank for extra time to add money to her account,
but the call handler did not approach the situation sensitively. As a result, the
customer felt overwhelmed and unable to explain her situation which remained
unresolved. This contrasts with the same consumer’s experience at another bank
where they were put at ease so they felt comfortable discussing their financial
difficulties. The bank offered to set up a basic bank account for the consumer and
reassured her by offering to answer any questions.
This shows the importance of empathy, empowered and knowledgeable staff
in delivering the fair treatment of customers.
f. Buying inappropriate products or service and exposure to mis-selling:
consumers with characteristics of vulnerability may be more likely to have mistakenly
bought an inappropriate product or service because they misunderstood the
featuresorthetermsandconditions.Forexample,17%ofhigher-riskcreditcard
users have said that they chose their credit card because they thought it was the
only card they would be accepted for (FCA Credit Card Market Study 2016).
g. Scams and nancial abuse: consumers with some characteristics of vulnerability
may be more likely to fall victim to scams, including misleading onlinenancial
promotions.Theymaybespecicallytargetedthroughunsolicitedapproaches,
moretrustingormorelikelytobepersuadedtodisclosepersonalnancialdetails.
For example, research has shown that older consumers who may be lonely are more
likely to be at risk of being scammed. Some vulnerable consumers may be less likely,
or less able, to regularly check their bank account or statements and so less likely
to spot unusual transactions. Some may need to rely on informal access methods,
whichcanincreasetheriskofnancialabuse.Forexample,ourFinancial Lives 2020