New guidance for financial services firms to do more to protect vulnerable consumers has been announced by the FCA.

The proposals aim to provide a framework that will allow firms to accurately assess whether they are treating vulnerable consumers fairly – to ensure consistency across the financial services sector.

The regulator has calculated that more than 24 million people display one or more potential characteristics of vulnerability, which include physical and mental health issues, recent life events such as bereavement, capability and financial resilience. Over a million people also received debt advice last year.

The guidance is open for consultation until 30 September 2020, the FCA stated.

FCA interim chief executive, Christopher Woolard, said: “Today’s guidance sets out what firms should do to ensure vulnerable consumers are being treated fairly. We know many more customers will be struggling with their finances as a result of the impact of coronavirus.

“Supporting vulnerable consumers is a key focus for the FCA, and the coronavirus crisis has only highlighted its importance. While many firms do excellent work to support their vulnerable customers, we will not hesitate to step in where others do not.”

Responding to the regulator’s latest consultation, group communications director at Just Group, Stephen Lowe, said the retirement expert was pleased to see the FCA “pushing on with its vulnerability agenda” and providing more detail about how it expects firms to meet their obligations.

“The coronavirus pandemic has brought many of the vulnerability issues the FCA is trying to tackle into sharp focus – health problems, bereavement, job loss, financial stress – and is a reminder how quickly people’s circumstances can change due to events outside their control,” he added.

“We know that most firms have embraced the vulnerability issue and are taking steps in the right direction, but some are more advanced than others. Our own research last year found 94% of firms said they were treating the issue seriously. Embedding vulnerability is a challenge so the additional guidance and clarity provided by this latest consultation will be widely welcomed.”

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