Conor D’Arcy, Head of Research and Policy, Money and Mental Health

New FCA guidance means banks must improve treatment of vulnerable customers

23 February 2020

After several papers, drafts and rounds of consultation, the Financial Conduct Authority (FCA) which regulates financial services, this morning published its final guidance for firms on the fair treatment of vulnerable customers. It’s a major document that sets out what banks and other financial services firms need to do to ensure vulnerable customers — including those with mental health problems — can access the products we all rely on (you can read the new FCA guidance here). Read on for our initial take on the guidance and what it means for people with mental health problems

A welcome emphasis on communications and design

Our research has highlighted that firms need to think broadly about all the ways and moments they engage with customers to support those with mental health problems. That’s why it’s great to see the guidance emphasise the importance of the entire customer journey, pointing to steps that firms can take when designing products, training their staff and offering support. 

The guidance’s focus on communications is particularly crucial at the moment, with so many of us facing tough times financially and mentally due to the pandemic. As a survey we ran over the weekend with our Research Community suggests, there is still room for banks to improve. One in four of the 141 respondents —  all with lived experience of mental health problems —  said their financial service providers have done a bad job of supporting them since the start of lockdown last year. That’s why it’s vital that firms act on the areas flagged in the guidance, to ensure everyone is getting the support they need right now.

The FCA will make firms act on the guidance

Alongside the finalised guidance, the FCA has published a summary of the feedback it received as part of its most recent consultation on this topic. One issue raised by many of the respondents was how the FCA would monitor and enforce the guidance. In response, the FCA has said it will view firms’ actions through a ‘vulnerability lens’ and that firms should expect to be asked how their business model and culture ensure vulnerable customers are treated fairly. As with any area of regulation, the key test of its effectiveness is whether it leads to real improvement from firms, with enforcement — or the possibility of it — a powerful tool to drive change. This will be an area the FCA should monitor carefully to ensure vulnerable customers feel the benefit. If the change the guidance seeks isn’t being delivered, it should take stronger action.

Using the Equality Act to improve treatment of vulnerable customers

One issue we are particularly pleased to see the FCA launching new work on is in relation to equalities and discrimination. Alongside the guidance, the FCA has set out a commitment to work together with the Equality and Human Rights Commission (EHRC), the body tasked with enforcing the Equality Act 2010. The Equality Act requires firms not to discriminate against customers on the basis of protected characteristics, including disability. 

While the FCA is clear that it does not have the powers to enforce the Equality Act, it makes plain that breaches of the Act – it highlights a failure to provide reasonable adjustments for disabled people – will likely be a breach of the FCA’s rules. It plans to collaborate with the EHRC, sharing its expertise on financial services, to better protect people in those markets. Raising the Act and the responsibilities it places on firms is a welcome step and is a topic we’ll be doing more work on later this year.

Helping firms take the journey

Because of the long journey that the FCA has taken to this final guidance, firms should be prepared to take action immediately. To help firms better support their customers with mental health problems, we launched Mental Health Accessible last year. It’s a suite of programmes supporting essential services providers – including in financial services – who recognise they need to do more. That will help firms ensure they are complying with the new FCA guidance. But more importantly, it will help put the voice of lived experience at the heart of service design, and will make a big difference to the many customers struggling with poor mental health during the pandemic.