Assuring good outcomes for vulnerable customers

In March 2025 the FCA published feedback from its review of outcomes experienced by vulnerable customers and how well firms had embedded guidance issued in 2021. The FCA did not change its guidance but did identify several areas where firms were not meeting expectations.

The 2022 FCA financial lives survey indicated that 47% of UK adults show characteristics of vulnerability. The current climate may mean that as many if not more adults find themselves in a vulnerable position. The Consumer Duty has heightened the responsibility on firms to take an extra level of care with customers who are suffering from one or more characteristics of vulnerability.

Identifying vulnerability

Customer vulnerability is a complex phenomenon. It can be driven by poor health, life events, low financial resilience, and low capability which can occur at any stage and can happen unexpectedly. Characteristics of vulnerability may not always present themselves in day-to-day interactions and as many as 67% (FCA, 2022) may not even recognise themselves as being vulnerable. With customer vulnerability being complex and often hard to detect, firms need to be highly proactive. Only 42% of customers confirmed they disclosed their vulnerability to firms and only 19% of them said they were encouraged to do so.

Demographic or transactional data monitoring may be used to indicate potential vulnerability. Such data-based models can be refined over time to get better at detecting customers who might need a greater level of care. In addition, it is important for customer facing staff to be capable and equipped to effectively identify and treat vulnerable customers.

How to enable staff to identify vulnerable customers

To identify customer vulnerability the right listening and questioning techniques are critical. These are skills that can trained. Empathy and sensitivity are also important traits to develop in staff. With only 57% of vulnerable customers reporting that they felt the firm ‘cared’ there is a big gap to address here.

Scripts and decision-making tools will help staff be consistent in their treatment of vulnerable customers, and these can be particularly valuable when faced with difficult situations that may require a level of objectivity.

Firms also need to provide the right culture and day-to-day management. Handling vulnerable customers may demand extra time and put additional pressures on staff.

How does product and service design support vulnerable customers?

The FCA noted that firms had made little progress in designing products and services with vulnerable customers in mind. This does not mean designing specific products and services but ensuring that should a customer be vulnerable they can achieve the same outcomes as other customers. The key components of design are to determine where the different characteristics of vulnerability may present throughout the customer journey, how this will be identified, and how customers will be treated to avoid harm.

Key areas of focus where vulnerable customers may be most at risk of harm are communications and distribution channels, and suitability and affordability checks. Customers entering into arrears may be as a result of vulnerability, so it is critical that collections and forbearance measures factor for vulnerable customers.

Are you testing for good outcomes?

Even with a carefully designed operating model, firms need to be checking that vulnerable customers are achieving good outcomes. A robust and well implemented outcome testing framework will provide assurance that firms are doing the right thing, and also expose any failings so that they can be improved. Testing needs to include sufficient vulnerable customer cases, compared against other customer groups. The outputs from outcome testing need to be shared with the board and across the three lines of defence to ensure that action is taken in the right area of the organisation.

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