We welcome the updates to the guidance on the fair treatment of vulnerable consumers and support the Financial Conduct Authority's (FCA) ongoing work to ensure that this is embedded into the culture of financial service firms.
In light of significant overlap between protected characteristics, low income and vulnerability, we suggest that the guidance should be more closely aligned with the public sector equality duty.
In particular, we recommend that the FCA should work closely with the Equality and Human Rights Commission to encourage regulatory and policy change in aid of breaking the links between low income and high cost credit.
We also reiterate our concerns about the non-binding nature of the Guidance and call on the FCA to:
- Support the guidance with changes to the rules that signal the requirement for fair treatment of vulnerable consumers more strongly
- Ensure accountability and transparency among firms by undertaking an annual audit of outcomes for vulnerable consumers in financial services markets and requiring firms to report on how they are complying with the principles and guidance
- Establish a Duty of Care which will embed the concept of care and fair treatment of consumers at the highest level of the regulatory framework
Lastly, we support the focus on Management Information as a key tool for understanding and improving outcomes for vulnerable consumers. To reinforce a culture of effective data usage, we recommend that the FCA use the occasion of an annual audit of outcomes for vulnerable consumers to provide updates to firms about data and risk assessment processes with examples of good and bad practice.
You can download our full response here.