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.

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.

Key risks

• Relying on self-disclosure, when the FCA reports only 40% of vulnerable customers come forward.
• A cultural mismatch where frontline staff are incentivised to push sales over service.
• Treating vulnerability as static, rather than dynamic and shaped by life events, health issues or economic shocks.
• Lacking structured, evidenced monitoring of vulnerable customer outcomes, leaving firms unable to answer the FCA’s ‘show me, don’t tell me’ expectation.

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.