Vulnerable Consumers in Focus

  • 19 February 2019
  • Regulation & Compliance | Blog

With the FCA due to issue new guidance for vulnerable customers in 2019, we hear from Age UK on what measures they’d like to see.

Vulnerable Consumers in Focus Ahead of New Guidance

The Financial Conduct Authority will be issuing new guidance this year on how to identify and treat vulnerable consumers.

In September 2018, the All-Party Parliamentary Group on Financial Crime and Scamming also launched an inquiry into the impact of fraud and scams on vulnerable people.

Age UK, the UK's largest charity working with older people, was one of the organisations that responded to the All-Party Parliamentary Group inquiry.

The charity says it doesn’t consider 'older' people to be vulnerable by definition. But ageing often brings circumstances and challenges that can make people vulnerable in the sense of being less able to protect themselves. For example, cognitive impairment, health conditions, bereavement, loneliness and isolation.

“A key element of vulnerability is the impact of being a fraud victim,” Age UK says in its consultation response to the All-Party Parliamentary Group inquiry. “Older people can suffer severe, in some cases life-changing, financial and health impacts. There are cases of people losing their life savings, which they may not have time to rebuild if they have retired from work. Some people lose their home or go bankrupt as a result. Older people’s physical health can deteriorate quickly after being a victim of crime, and they can suffer severe psychological health impacts such as stress and depression.”

Banking behaviour

In terms of the behaviour of firms, Age UK suggests organisations need to recognise the part they play in creating vulnerability, and work to minimise it. For example, it believes banks unintentionally contribute to vulnerability by using customer communications like text messages that can be convincingly spoofed or impersonated.

Action should be prioritised on making these environments more secure.

“Banks should use customer interactions and data to identify customers particularly at risk, and offer and apply additional protections,” Age UK suggests. “They should also offer customers the option of self-declaring their vulnerability.

“We are aware of at least one high street bank that allows people to self-declare their vulnerability to scams and ask for additional protection. Those people who want to do this – even if relatively small in number – should be able to do so and all banks should offer this facility.”

While only a small proportion of customers will self-declare as vulnerable, and some people may not recognise themselves as vulnerable, the onus should be on firms to pro-actively look for signs on vulnerability in their customers’ accounts.

Branch closures also remove opportunities for customers in vulnerable circumstances to bank safely, Age UK argues. Banks should improve the security of alternative channels – and ensure customers who lose access to a branch are properly supported.

Read more on vulnerable customers in our Special Report within Chartered Banker magazine.