How To Treat Vulnerable Customers Fairly

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    The new Consumer Duty will require all firms to assess the effectiveness of their actions and interactions and enable positive outcomes for consumers. This is even without a direct relationship with the said consumer, impacting all involved in the production chain. As such, it will ask all firms what outcomes consumers should expect from their products and services. Those more vulnerable should receive additional care to ensure outcomes are as good, if not better.

    The FCA has therefore provided these guidelines on why and how to treat vulnerable customers fairly. On top of that, the regulator will also supervise in order to make firms cooperate properly.

    Why should retail firms treat vulnerable customers fairly?

    Vulnerable customers are those who need additional or different needs than regular customers.  This inhibits their ability to make informed decisions that represent their actual desires. They are put at more risk due to this, presenting firms with the opportunity to take advantage. Although this is not the case most of the time, there are instances where vulnerable customers have been duped into purchasing something they do not actually need.

    How should retail firms treat vulnerable customers fairly?

    Policies, business models, cultural practices and processes should all be updated to reflect the fair treatment of vulnerable customers. Customer care is of high importance to both the business and its potential customers, showing that there is a robust level of protection in place.

    The FCA’s Guidance sets out the actions firms should take to treat customers in vulnerable circumstances fairly. They require the firm to:

    • understand the needs of their target market/customer base;
    • ensure staff have the skills to recognise and respond to the needs of vulnerable customers;
    • respond to customer needs throughout all stages of the product life cycle;
    • monitor goals of vulnerable customers’ needs, making improvements where necessary.

    The Guidance is full of examples and case studies if retail firms need a point of reference. However, it is also recommended that firms consider what they can learn from other sectors and how critical messages in the examples/case studies may be relevant.

    Do retail firms need to follow these specific guidelines?

    Terms used throughout the Guidance state ‘must’, ‘should’, and ‘may’. This means firms are not bound to what is stated throughout. However, the FCA does encourage firms to take up these actions if they do not have anything else currently in place. Standards must be met in order to treat customers fairly, otherwise be subject to investigation and potentially shut down. Whatever is relevant to the firm in question – retail in this instance – should be taken into consideration.

    How will the FCA monitor and take action?

    They will monitor how firms are treating vulnerable customers through regular engagement and intelligence gathering with firms. But also through research and analysis of insights, including with consumers and provided by the Consumer Network.

    This will not be a one-off exercise either. They may ask about outcomes for vulnerable customers during regular interactions or as part of project work. Then they will formally evaluate firms’ progress and the effectiveness of their actions in 2023/24.

    Data and intelligence will be invested in to support their understanding of consumer experience. This will be used to ask questions where misconduct is suspected, even in areas where they are not the principal regulator. Supervisory tools are used, as well as enforcement powers, to take action against firms and individuals that do not meet the standards. Then this data will be shared publicly to help inform consumers and influence firms’ conduct.

    What training is recommended for staff?

    This is something firms should determine. But when determining the training, it may be helpful to consider the following:

    • The needs of the target market and customer base, tailoring the training accordingly;
    • What their monitoring and assessment is showing;
    • Staff should be able to recognise when it is appropriate to seek additional support.
    How do retail firms monitor the fair treatment of vulnerable customers?

    Firms should make sure vulnerable consumers are receiving excellent treatment. If they are not, then efforts must be made to improve the quality of the products or services. However, the FCA requires firms to show them information regarding the monitoring. This is to see whether they are achieving positive outcomes for consumers with characteristics of vulnerability.

    This includes the policies, business models, cultural practices and processes mentioned above as well as how this all results in the fair treatment of vulnerable and regular consumers.

    How can we assist you?

    Victis Corp is designed to give you a helping hand when it comes to growing your business. Our senior management team has a wealth of experience spanning over one hundred years of industry knowledge. We also have in-depth administrative tools to help your business monitor all information relating to product reliability. To be in with utilising all of these fantastic assets, then call 0844 967 2600 or email info@victis-corp.com today! We look forward to speaking with you.

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