Merlyn Holkar, Senior Research Officer, Money and Mental Health

The FCA calls on firms to improve support for vulnerable customers

23 July 2019

This morning the financial regulator, the FCA, released important new draft guidance for banks and other financial services providers. The guidance sets out how firms should treat customers who might be vulnerable to harm – including many people with mental health problems – in greater detail than ever before.

We know that people with mental health problems are three and a half times as likely to be in problem debt, and can experience a range of difficulties when dealing with financial services, so we welcome this detailed guidance to push up standards.

Over the coming weeks we’ll be working through the FCA’s proposals in more depth, but here are our initial reflections:

1 – Firms have been given a clear call to action

The FCA has made it clear that they want to see improvements in how banks and other financial firms treat vulnerable customers. They found that some providers are currently failing to think about vulnerability, and that there is inconsistency in how vulnerable customers are treated, both across the sector and within individual providers. In response, the FCA has set out an ambitious vision, calling on providers to ensure that outcomes for vulnerable consumers are at least as good as those experienced by everyone else. This would make a huge difference to many people with mental health problems.

2 – Vulnerability should be a key consideration in the design of financial products and services

We’re particularly pleased to see the FCA highlight that the design of products and services to better meet the needs of vulnerable customers should be a key consideration for firms. Our research has found that millions of people with mental health problems struggle to effectively use essential services, often because of difficulties making phone calls, opening post or filling in complex forms. Many of these problems could be avoided by careful design, and we advocate a universal design approach – which means ensuring that the additional and different needs of people are considered right from the start of designing systems, products and processes. By designing products and services with the needs of the most disadvantaged customers in mind, providers can ensure that they are accessible and easy to use for all of their customers. The FCA also suggest that this approach might help firms meet vulnerable customers’ needs.

3 – There is clear appetite among firms to do better – this guidance shows them how

The FCA also make it clear that financial services providers have actively asked for clearer guidance from their regulator, on what they should be doing to understand and respond to the needs of their vulnerable customers. This is a promising sign, and we encourage providers to act now and explore the range of good practice examples set out in the FCA’s document, rather than waiting for this guidance to be finalised, while vulnerable customers continue to struggle.

In particular, we’re delighted that the FCA has specifically highlighted the Mental Health Accessible Standards we launched last month – an initiative to help banks and other essential services firms better understand the challenges that customers with mental health problems face, and to make their services easier to use. We’re currently working on a pilot of the standards with Lloyds Bank, and hope to extend the initiative to more firms in the coming year.

Overall, the FCA has set out clearly how it thinks financial firms can improve the service they offer to people who might be vulnerable to harm. We’ll be looking at the draft guidance in more depth over the summer, including considering how it can be enforced, and will put together a fuller response in time. But in the meantime, we’re urging firms to explore this guidance now and take action to make their services work better for people with mental health problems.