Firms express low confidence in current vulnerability support

What happened?

In a recent TCC webinar, panellists Garry Evans, Gary Maude and Juana Diaz-Landinez explored how firms are applying the FCA’s existing vulnerable customer guidance in practice.

Polling found that only 18% of firms are highly confident their processes and controls meet FCA standards for identifying and managing vulnerable customers, with 68% moderately confident and 14% uncertain.

Recent FCA reviews of multi-sector and retail banking firms found no new standards were needed, but did highlight significant gaps in application, with fines of £6 to £10 million issued where poor outcomes and weak oversight were found.

Why does it matter?

Redress amounts reported alongside these reviews are substantial: up to £185 million to HSBC customers, £105 million from TSB following a £10.9 million fine, and over £21.5 million from Volkswagen Financial Services to around 110,000 customers following a £5.4 million fine.

The FCA’s rules on vulnerability haven’t changed significantly; the regulator’s concern is that firms aren’t consistently embedding them into day-to-day practice, and only 4 in 10 vulnerable customers say they have disclosed their needs.

TCC’s house view summarises the FCA’s priorities across five key areas

1. Alignment: strategy and culture must reinforce each other
2. Adaptation: products and processes should flex with customer needs
3. Identification: firms must proactively spot vulnerability, not wait for disclosure
4. Treatment: support must be personalised, proportionate, and consistently delivered
5. Evidence: firms must demonstrate that outcomes for vulnerable customers are fair and that oversight mechanisms are effective

Vulnerability isn’t just a regulatory checkbox – it’s a moral and business necessity. As the FCA’s focus intensifies, firms that get this right will avoid enforcement and build better, more resilient relationships with their customers.

Who is affected?

Firms across wealth management, pensions, payments, banking, lending, insurance and motor finance whose frontline staff, culture and processes shape how vulnerable customers are identified and supported.

Actions to take

1. Align culture and strategy around vulnerability, and drive these values into processes, training and risk management.
2. Build proactive processes to identify indicators of vulnerability, rather than relying solely on customers to disclose.
3. Design personalised, proportionate treatment plans with ongoing monitoring and adaptation.
4. Capture structured data and metrics on vulnerable customer outcomes, including honest feedback from customers who received poor outcomes.

Wider implications

TCC’s house view groups the FCA’s priorities into five areas: alignment of strategy and culture, adaptation of products and processes, proactive identification, personalised treatment, and evidence that outcomes are fair.

Recommendations

Firms should move beyond ‘being nice’ to demonstrating fair outcomes, ensuring flexibility in how staff support customers is guided by clear frameworks rather than unstructured discretion.