Campaigners celebrate as FCA backtracks on proposed changes for vulnerable customers

17 July 2018

The Money and Mental Health Policy Institute joined other campaigning charities celebrating today as the Financial Conduct Authority reversed proposals for a heavily criticised new definition of ‘vulnerable consumers’.

In November 2017 the regulator began consulting on its ‘Approach to Consumers’ paper, which included proposals to change the definition of ‘vulnerable consumers’. Campaigning charities including Money and Mental Health, Macmillan, Stepchange and the Money Advice Trust argued that the proposed new definition watered down firms’ responsibilities to proactively identify and support vulnerable customers, as well as specifically disadvantaging people with ‘hidden’ conditions like mental health problems.

The proposed new definition stated that vulnerable consumers must be ‘readily identifiable’. Mental health problems can make it practically hard to communicate with banks and other companies to ask for help, are less well understood by call centre operatives, and stigma acts as a further barrier to disclosure. As a result, mental health campaigners argue that few mental health problems would be considered ‘readily identifiable’, and the proposed definition could lead to banks and other financial services providers leaving this group of customers without support.

Today the Financial Conduct Authority published its response to the consultation, backtracking on the proposed new definition. Instead the regulator will revert to the existing definition and consult on new guidance for firms on how to identify and support vulnerable customers.

Responding to the announcement, Helen Undy, incoming Director of the Money and Mental Health Policy Institute said:

“This definition is the sort of small print that really matters – in this case, the wording will determine who gets additional support from their bank or credit card company, and who doesn’t. The existing definition of vulnerable customers is clear, concise, and places appropriate responsibility on firms to take action, so we were surprised and disappointed by the proposal to change it. The new wording risked specifically disadvantaging people with mental health problems and other less ‘visible’ conditions, which was clearly not the FCA’s intention. It is to the regulator’s credit that they have listened to the concerns of campaigners, and it shows what the sector can achieve when we work together.”




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Notes to Editors

About Money and Mental Health

  • The Money and Mental Health Policy Institute was set up by Martin Lewis in spring 2016, registered charity number 1166493. It conducts research and develops policies for banks, lenders, regulators, the health service and government to help people with mental health problems protect themselves from financial difficulties and get out of debt. Helen Undy takes over as the Institute’s Director at the end of July, having previously led the charity’s influencing and campaigning work as Head of External Affairs.
  • Martin Lewis OBE, Money Saving Expert, founded and funds the Money and Mental Health Policy Institute.  He is is an award-winning campaigning broadcaster, newspaper columnist and author. He founded in 2003 for £100 and is still active as the website’s Executive Chair. It is now the UK’s biggest money site, with more than 14 million monthly users. Martin has his own prime-time ITV programme –  The Martin Lewis Money Show – and is resident expert on This Morning, Good Morning Britain and BBC Radio 5 Live’s Consumer Panel, among others. Martin was appointed OBE in the Queen’s Birthday Honours list in June 2014.

About the definition of vulnerability

  • The existing FCA definition of vulnerability 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.’
  • The proposed new definition of vulnerability 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.”
  • The proposed new definition was including in the Financial Conduct Authority’s publication ‘FCA Mission: Our Future Approach to Consumers’.
  • In November 2017 a group of charities including The Money and Mental Health Policy Institute, Money Advice Trust and StepChange wrote to the Financial Conduct Authority to raise shared concerns about the new definition.