On 7 March 2025, the Financial Conduct Authority (FCA) published the findings from its thematic Vulnerability Review, detailing firms’ treatment of customers in vulnerable circumstances, followed by an FCA webinar on 11 March 2025.
The review aimed to:
- assess how firms have implemented the FCA’s 2021 Guidance for the Fair Treatment of Vulnerable Customers (FG21/1), and
- test how effectively firms are identifying, supporting, and monitoring outcomes for vulnerable customers.
The FCA found a renewed focus among firms on delivering positive outcomes for vulnerable customers in response to the Consumer Duty (the ‘Duty’) and identified several examples of good practice aligned with the key expectations and requirements of the Duty.
However, the FCA also highlighted several critical areas for improvement, many of which are foundational to the Duty and its overarching principle that firms should act to deliver good outcomes for retail customers. These areas include:
- Under-reporting of Vulnerabilities: A significant proportion of vulnerable customers have not disclosed their needs to their financial services provider. The FCA’s research showed that where customers did disclose their vulnerabilities, they experienced noticeably better outcomes, including more tailored questions designed to better understand their needs.
- Inadequate Staff Training: Some firms lacked tailored training programs to help staff understand and address the specific needs of vulnerable customers. This gap can lead to inconsistent support and missed opportunities to provide assistance to those in need.
- Ineffective Outcome Monitoring: The FCA found that some firms had ineffective monitoring of outcomes for vulnerable customers. These firms lacked clarity on what constitutes a successful outcome. They also failed to establish clear measures for success. Which hindered the ability to assess and improve the support provided for vulnerable customers.
- Insufficient Root Cause Analysis: Some firms did not conduct thorough root cause analyses of complaints related to vulnerable customers. This oversight prevents firms from identifying systemic issues and implementing corrective actions to prevent recurrence.
Next Steps following the Vulnerability Review:
The FCA expects firms to leverage the findings from the review to assess where, if necessary, changes should be implemented to improve outcomes for vulnerable customers.
Last year, Square 4 produced a White Paper: Supporting Customers in Vulnerable Circumstances. This provides a holistic overview of FCA expectations for the identification and treatment of vulnerable customers and common challenges. It also explains how firms can overcome these issues by implementing a robust Vulnerable Customer Operating Model.
In light of the FCA’s thematic review findings, we have produced a comprehensive summary of the findings. This outlines a series of critical questions that firms should consider in order to evaluate the extent of changes required in response to identified poor practices. This analysis provides a deep dive into these poor practices, amplifying the good practice set out in last year’s White Paper.
To gain a deeper understanding and address the FCA’s thematic findings download our comprehensive summary by clicking on the link below.
If you would like to discuss any aspect of your firm’s approach to Vulnerable Customers, Consumer Duty, Outcomes Testing, or any other conduct-related matters. Please get in touch with us at hello@square4.com.
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