Helen Undy, Incoming director, Money and Mental Health
A collective campaign win: The Financial Conduct Authority & vulnerability
17 July 2018
So we didn’t win the world cup. Or the tennis. But this week has been brightened for the Money and Mental Health team with a campaign win that could genuinely help millions of people. It’s not a big gold trophy, it’s not even a massive cheque or a shiny new service – it’s a change of wording in a technical document – so bear with me while I explain why it’s so important.
As any researcher will tell you, definitions matter. Dull as they may sound, definitions are the rules that allow us to work together for a common purpose. We can’t effectively target our efforts to reduce the prevalence of mental health problems or problem debt without first defining what those terms mean – and if we don’t share common definitions, our understanding becomes patchy and action to tackle these issues risks being vague, limited or misdirected. We can’t compare the efforts of two services to tackle a problem if they each have their own understanding of what they’re working towards – nor can we hold them to account for failure if the parameters for success are so slippery and ill-defined. So a fundamental building block for social change is defining the problem we want to tackle, and doing so in a way that is not only shared, but is precise, accurate and understandable.
Who are ‘vulnerable customers’?
Over the last few months we have been working with partners including StepChange Debt Charity, the Money Advice Trust, Age UK and Macmillan to persuade the FCA that proposed changes to their definition of ‘vulnerable consumers’ risk undermining their wider good work in this area. The FCA has made supporting consumers in vulnerable circumstances a priority since 2015, improving practice in firms and setting an example that other essential services regulators have been inclined to follow. So we were disappointed in the autumn when the FCA consulted on a new definition of vulnerability, one which risked watering down firms’ responsibilities, disadvantaging people with mental health problems, and undermining wider efforts by the FCA on this agenda.
The existing definition of vulnerability used by the FCA states that a ‘vulnerable consumer’ ‘is someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care’. It’s clear, concise, and both identifies how firms can cause vulnerability, and places appropriate responsibility on them to identify it. In contrast, the proposed new definition was that vulnerable consumers are:
- “people who can readily be identified as significantly less able to engage with the market, and/or
- people who would suffer disproportionately if things go wrong.”
There are many problems with this definition, which you can read about in our full response to the FCA, but one jumps out right away. To limit the definition of ‘vulnerable consumers’ to those who can be ‘readily’ (or ‘easily’) identified, disadvantages people with hidden or stigmatised conditions like mental health problems. We know that people with mental health problems are less likely to have symptoms that could be easily identified or understood by a call centre operator. We know that they are more likely to find the communication channels used by financial services firms inaccessible, so are less likely to be able to reach out for help. And we know that stigma can be an additional barrier to telling banks or others about mental health problems. These factors combined mean that mental health problems are rarely ‘readily identifiable’. Many of these same arguments have been well rehearsed when tackling the historic lack of access to the benefits system or social care for people with mental health problems, so it was disappointing to see the FCA falling into a similar trap.
At the end of 2017 we wrote to the FCA with a coalition of organisations who shared our concerns. We raised them at events and in meetings, in the press and in social media, and, to their credit, the FCA listened. Today the regulator confirmed that they will not be introducing the new definition – it’s a big success and shows what the sector can achieve when we work together. Instead, the FCA will be continuing to use the existing definition, and will consult on new guidance for firms on how to identify and support vulnerable customers. We welcome this renewed focus on firms’ responsibilities, and the opportunity it creates for firms, and the regulator, to work with consumer organisations to understand how best to deliver them.
The FCA’s Consumer Approach document states that ‘delivering good outcomes for vulnerable and excluded consumers requires a degree of co-operation between firms, stakeholders and the FCA.’ We agree, and we’re delighted that we now have the shared understanding we need to work together towards this common purpose.
Find out more, read our full response to the FCA’s consumer approach consultation.
Our analysis of the other commitments made by the FCA in today’s paper will follow shortly.