Even before the COVID-19 outbreak the FCA had a long-standing focus on regulated firms' treatment of vulnerable customers. The anticipated economic impact of the pandemic has brought this work into even sharper focus.
A consultation on new guidance closed in September 2020, with finalised guidance expected in late 2020 or early 2021. In line with this new guidance firms that deal with retail individuals should expect their treatment of those that are vulnerable to be the subject of FCA scrutiny, whether by Supervision or Enforcement, and whether or not there is actual harm. The FCA expects not only "tick box" compliance with the new guidance but have said in no uncertain terms that the protection of vulnerable customers should run through firms' culture, policies and processes covering the customer "journey", from product design to day-to-day interactions. This article considers the new guidance, where some of the risks are for firms and what should be done to implement necessary changes.
The FCA's proposed guidance relates to the FCA's Principles for Businesses – fundamental standards that govern the behaviour of all FCA regulated firms. Whilst (as with all FCA guidance) the guidance will not be directly binding on firms, the Principles are, and the guidance will therefore be relevant to the question of compliance with the Principles including potentially in the context of FCA Supervision and FCA Enforcement activity. Just as important for regulated firms it also seems likely that (again whilst not directly enforceable) the guidance will become relevant background to cases before the Financial Ombudsman (FOS) and in the context of civil litigation. In short, firms should take this guidance seriously.
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