On 7th March 2025, the Financial Conduct Authority (FCA) published its review on how firms are treating customers in vulnerable circumstances. The review forms part of the FCA’s ongoing commitment to ensuring that the Consumer Duty is effectively embedded within firms. As we approach two years since the introduction of the Consumer Duty, the review highlights both good practices and areas for improvement, through which the FCA emphasises the importance of delivering good outcomes for all customers, especially those in vulnerable circumstances.
Firms should take note of the good practices and areas for improvement highlighted by the FCA and use these as examples to enhance their own implementation of the Consumer Duty.
Governance and Outcomes Monitoring
The FCA’s review is clear: firms are expected to monitor and regularly review the outcomes experienced by their customers. Effective monitoring involves defining what constitutes a good outcome, using high-quality data, having clear escalation processes, and implementing strategies for continuous improvement.
Good Practice
Firms that excel in outcomes monitoring clearly define what a good outcome looks like for their products and services. They use relevant data to make evidence-based assessments of customer experiences. For example, some firms use management information to compare outcomes for different customer cohorts, identifying areas where vulnerable customers may be experiencing poorer outcomes. Additionally, proactive firms escalate issues to senior leadership and adapt processes as needed to improve outcomes.
Areas for Improvement
Despite the Consumer Duty’s focus, many firms struggle with effectively monitoring outcomes. Common issues include a lack of clarity on what constitutes good and poor outcomes, reliance on insufficient data, and inconsistent approaches to addressing identified issues. Firms often rely on easily accessible data that may not provide a complete understanding of customer outcomes, limiting their ability to make informed improvements.
Consumer Support
The FCA’s review identifies several key practices that contribute to effective support, including identifying signs of vulnerability, empowering frontline staff, and tailoring support to meet individual needs.
Good Practice
Firms providing exemplary consumer support take proactive steps to identify vulnerability and encourage customers to disclose their needs. They use centralised systems to store and access information about customers’ circumstances, reducing the need for customers to repeatedly disclose sensitive information. Additionally, some firms use artificial intelligence (AI) systems to identify potential vulnerability characteristics and provide tailored support based on real-time analytics.
Areas for Improvement
The review highlights that many firms fail to take adequate steps to identify vulnerability and respond with flexibility to customers’ needs. Digital customer journeys, in particular, pose challenges in identifying and addressing vulnerability. Furthermore, some firms do not use their systems effectively to check and act upon recorded customer information, leading to poor outcomes.
Consumer Understanding
Ensuring that customers can make informed decisions about financial products and services is a central component of the Consumer Duty. Firms must provide clear, timely, and tailored communications that meet the needs of their target markets, including vulnerable customers.
Good Practice
Firms that are correctly supporting consumer understanding use plain English in their communications, avoid jargon, and provide information in a timely manner. They also tailor communications to the specific needs of their target markets and offer multiple communication channels to ensure accessibility. Best practices include customer testing and third-party reviews to assess and improve communication effectiveness at each stage of the customer journey.
Areas for Improvement
The review identifies several areas where firms need to improve their communications. These include ensuring consistency in providing clear information, improving the timeliness of communications, and tailoring messages to meet the specific needs of vulnerable customers. The FCA pinpoints testing and reviewing communications with customer feedback as essential for ensuring that customers understand the information they need to make decisions in their best interests.
Product and Service Design
Firms must ensure that their products meet the needs, characteristics, and objectives of their target market while avoiding foreseeable harm, according to PRIN 2A – The Consumer Duty.
Good Practice
Some firms demonstrate good practice by incorporating inclusive design principles and engaging with third parties to review and design products. Examples include banks offering features to block gambling transactions and insurers designing products that account for pre-existing medical conditions. These firms use detailed questions and thorough reviews to ensure that their products meet the needs of vulnerable customers.
Areas for Improvement
The FCA’s review highlights significant gaps in how firms design products and services for vulnerable customers. Many firms lack comprehensive training for product and service design staff on vulnerability and its relevance to their roles. Furthermore, few firms test the impact of their products on vulnerable customers, leading to a disconnect between product design and actual customer needs. Firms need to incorporate more data and insights about vulnerability into their design processes and staff training to ensure that products and services effectively meet the needs of all customers.
Complyport’s Takeaway
The FCA’s review on delivering good outcomes for vulnerable customers provides valuable insights into the current state of practices within firms across the financial sector. While there are examples of good practice, significant areas for improvement remain, particularly around testing.
To focus on the needs of vulnerable customers, firms must implement effective monitoring and support systems. They should ensure that products and services are designed to meet the diverse needs of their customer base.
In practice, this means that firms need to test their processes, practices and data for each outcome to ensure alignment with the real needs of vulnerable customers. By doing so, they can better fulfil their obligations under the Consumer Duty and deliver fair and positive outcomes for all customers. For further guidance, firms can refer to the FCA’s FG21/1 Guidance for firms on the fair treatment of vulnerable customers.
How Complyport Can Help
Our team of experts can support your firm in navigating the evolving expectations under the Consumer Duty. With in-depth experience in FCA regulations, we are well-versed in both the specifics of the Duty and the best practices employed by peer firms.
Some of our services include:
- Consumer Duty Gap Analysis: Assess your firm’s current Consumer Duty framework, with a focus on how vulnerable customers are identified, supported, and monitored across all outcomes.
- Staff Training and Awareness: Deliver tailored training sessions for frontline staff, product designers, and senior management on recognising and responding to vulnerability in line with FG21/1.
- System and Process Reviews: Evaluate and enhance internal systems (e.g. CRM, AI tools, record-keeping) to ensure vulnerability indicators are captured, shared, and acted upon efficiently.
- Vulnerability Policy Development: Help draft or refine your firm’s Vulnerability Policy to meet FCA expectations and embed it effectively across departments.
- Audit and Assurance Services: Conduct independent reviews of your Consumer Duty implementation, with specific focus on the treatment and support of vulnerable customers.
Get in touch with us today at info@complyport.co.uk or book a meeting with a Subject Matter Expert here.
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This article was originally featured on Complyport | Source
