Understanding the FCA’s Latest Review on Treating Vulnerable Customers

The Financial Conduct Authority (FCA) has recently published a series of comprehensive reports assessing how firms treat customers in vulnerable circumstances. These reports, released on March 7, 2025, aim to provide insights into the effectiveness of existing guidance, highlight best practices, and identify areas where firms need to improve. The publications reinforce the importance of ensuring fair treatment and good outcomes for all customers, particularly those who may be at a higher risk of harm due to their personal circumstances. This article explores the findings from these reports and provides a detailed analysis of how financial firms can enhance their approach to supporting vulnerable customers.

Firms’ Treatment of Customers in Vulnerable Circumstances – Review (March 7, 2025)

The FCA’s review of firms’ treatment of customers in vulnerable circumstances sought to assess how well firms have implemented the guidance outlined in FG21/1. The primary objective of this review was to determine whether the existing guidelines remain relevant, especially in light of the Consumer Duty, which raises the standard for customer care. The findings revealed that while many firms have made progress in providing better support, there is still significant work to be done.

The review highlighted that some firms have implemented effective policies to support vulnerable customers, but there are still gaps in the consistency and effectiveness of these measures. The FCA found that although some consumers reported positive experiences, particularly when firms demonstrated flexibility and tailored support, many others continued to face difficulties. The report pointed to the need for firms to improve their products and services to ensure they are designed with the needs of vulnerable customers in mind. Moreover, the monitoring of customer outcomes remains inadequate in several sectors, making it difficult to assess whether customers in vulnerable circumstances are receiving fair treatment.

To improve outcomes, firms should enhance their data collection and monitoring strategies. Effective use of data analytics will allow firms to track the customer journey more precisely, identify where gaps exist, and make necessary adjustments. Training for frontline staff must be expanded to ensure that employees can recognise and respond effectively to vulnerability indicators. Firms should also implement a clear escalation process to address cases where customers require additional support, ensuring that assistance is prompt and meaningful.

Delivering Good Outcomes for Vulnerable Customers – Best Practices and Areas for Improvement (March 7, 2025)

The second publication delves into the practical aspects of how firms can enhance their approach to supporting customers in vulnerable circumstances. It outlines the key factors that contribute to good outcomes and identifies the most common shortcomings observed in the industry.

One of the most critical findings of this report is the importance of using data effectively to monitor customer outcomes. Firms that successfully track and analyse data on customer interactions are better positioned to identify and address issues affecting vulnerable customers. However, the FCA found that many firms still struggle with defining and measuring what constitutes a "good outcome." Without clear benchmarks and reliable data, it becomes challenging to assess whether the support provided is truly beneficial for customers in need.

To address these issues, firms should establish clear Key Performance Indicators (KPIs) specifically for vulnerable customers, ensuring that these measures are regularly reviewed and adjusted based on consumer feedback. Proactive engagement with customers, including regular check-ins and surveys, can help firms better understand emerging issues before they escalate.

Another crucial aspect of delivering good outcomes is the ability to offer flexible and tailored support. Firms that train their frontline staff to recognise and respond to signs of vulnerability are far more effective in meeting customer needs. In contrast, those that fail to provide adequate training often leave their employees ill-equipped to handle complex customer situations. The FCA emphasises that frontline staff should have the necessary skills, knowledge, and authority to provide appropriate assistance, rather than adhering to rigid, standardised procedures that may not accommodate individual circumstances.

Clear communication also plays a vital role in ensuring vulnerable customers receive the support they need. The report found that some firms have taken proactive steps to improve their messaging, simplifying product information and making it more accessible to a wider audience. However, others still fall short, particularly when it comes to providing alternative communication channels for customers who may have difficulty accessing traditional methods.

A best practice approach would involve offering multiple communication channels, including telephone, digital chat, and in-person support, to cater to different customer needs. Testing these communication methods regularly with vulnerable customers can help firms refine their approach and ensure accessibility for all.

Vulnerability Review – Improving Outcomes for Consumers in Financial Services (March 7, 2025)

In a separate research study commissioned by the FCA, the experiences of consumers in vulnerable circumstances were examined to better understand the real-world impact of firms’ policies and practices. This research provides valuable insights into the challenges that consumers face and highlights both positive and negative interactions with financial services providers.

A key finding from the study is that consumers who disclose their vulnerabilities often receive better support. However, many individuals hesitate to share their circumstances due to concerns about being treated unfairly or receiving a worse deal. This reluctance can result in customers not accessing the assistance they need, leading to poor outcomes. Firms can address this issue by creating an environment that encourages transparency and reassures customers that disclosing their vulnerabilities will lead to better support rather than negative consequences.

To improve customer confidence in disclosure, firms should implement trust-building measures such as anonymous self-assessment tools, where customers can indicate their support needs without feeling exposed. Firms must also train staff to handle sensitive conversations with empathy, ensuring that customers feel secure and supported throughout the process.

Consumer Support Outcome – Good Practices and Areas for Improvement (March 7, 2025)

The final publication focuses on how firms provide ongoing consumer support, particularly for customers who may need additional assistance throughout their relationship with financial service providers. The FCA assessed how firms structure their support services, the accessibility of these services, and whether firms have embedded a strong culture of consumer care.

One of the most significant findings from this review is the disparity between pre-sale and post-sale support. Many firms place considerable effort into ensuring a smooth onboarding process but do not offer the same level of assistance once the customer relationship has been established. This results in customers struggling to access support when they encounter difficulties, leading to frustration and potential financial harm. Firms are encouraged to take a balanced approach, ensuring that post-sale support is just as accessible and effective as pre-sale assistance.

To close this gap, firms should implement post-sale service audits to evaluate the quality of ongoing support. Providing customers with a designated support team or personal account manager can significantly improve the consistency of service and enhance customer trust.

Another area for improvement is the need for firms to align their support processes with their target market. The FCA found that some firms have not adequately considered the specific needs of their customer base, leading to gaps in service delivery. For example, firms that cater to customers with limited digital literacy should offer alternative support channels to ensure that these individuals are not excluded from essential services.

The FCA’s latest publications reinforce the urgent need for financial firms to enhance their approach to supporting vulnerable customers. While progress has been made, there is still a considerable gap between current practices and the outcomes that the FCA expects to see. Firms must move beyond a compliance-driven mindset and focus on delivering genuinely beneficial experiences for their customers.

To achieve this, firms should invest in better monitoring tools, staff training programs, and targeted consumer engagement initiatives. Establishing clear accountability at the leadership level and fostering a customer-centric culture will also be critical in driving improvements.

The key takeaway from these reports is that supporting vulnerable customers is not just about ticking regulatory boxes—it is about embedding a culture of care, continuously monitoring outcomes, and adapting services to meet evolving customer needs. Firms that take a proactive, customer-centric approach will not only meet regulatory requirements but also build stronger, more trusted relationships with their clients. The question that all firms should be asking themselves is: Are we truly delivering the best possible outcomes for our vulnerable customers, and how do we know?