The FCA recently published its findings relating to good practice and areas of improvement in payments firms’ approaches to supporting consumers in vulnerable circumstances.
Noting that around half of UK adults show at least one characteristic of vulnerability, the FCA stressed that a significant number of customers may be less resilient if things go wrong. This is particularly acute in a world where many business models rely on digital interactions, which can itself amplify the potential for harm.
The FCA’s findings are split into five categories, as outlined below. They provide useful, practical pointers as to what payments firms can do to enhance their vulnerable customer processes.
The FCA generally found that those firms delivering good consumer outcomes have a good grasp of the scale and nature of vulnerability within their customer base, are able to identify common vulnerabilities (such as digital exclusion), identify vulnerable customers throughout the customer journey and consistently record information using system-based processes.
Examples of good practice included:
proactively prompting customers to disclose any support needs;
using data and interaction signals to identify potential vulnerability, such as by training call handlers to recognise indicators such as limited English language skills; and
testing identification processes – for example, examining whether their processes work in practice, through call monitoring and complaints monitoring.
Areas for improvement identified included:
firms having policies and training in place without being able to demonstrate these were working in practice (a common theme from the FCA – there is no point having policies in place unless they are followed in reality);
over-reliance on the judgment of staff when it came to vulnerability identification; and
inadequate recording of vulnerability information and insufficient sharing across the customer journey.
The FCA made clear that the support a firm provides should reflect its activities, role in the customer journey, level of customer interaction and the risk of harm.
Areas of good practice identified included where firms:
tailored support to the needs identified in their customer base and customer journeys;
offered flexibility (such as time, channels, or communication formats); and
applied support consistently.
Specific examples of this consisted of:
trialling different support options with customers before scaling the most effective ones;
providing training and guidance to intermediaries’ staff; and
providing tailored support to customers with limited IT skills, including assisted onboarding and alternative channels.
However, the FCA found that some firms:
relied on approaches that were not always applied consistently across the customer journey; and
were unable to evidence how identified characteristics of vulnerability translated into tailored support.
The FCA's observations suggest that firms should move beyond generic support frameworks and focus on demonstrating a clear link between identified customer needs, the support provided and the outcomes achieved. This reflects the broader Consumer Duty expectation that firms take proactive and outcome-focused steps to prevent foreseeable harm rather than relying solely on process-based compliance.
The FCA found that firms delivering good outcomes:
communicated in ways that were clear, accessible, and appropriate for customers;
tailored their communications for vulnerable customers, including using different formats and channels to support understanding; and
tested communications to make sure they are effective and support informed decision making.
As part of this, firms offered alternative channels and additional support for customers with limited digital capability and sought feedback from customers in vulnerable circumstances and consumer panels to more fully understand customer needs and test the efficacy of support arrangements.
Where improvement was required, firms:
offered limited flexibility in how customers can engage with the firm; and
relied primarily on standard communications, with limited tailoring.
The findings serve as a reminder that clear communication is a key mechanism for delivering good customer outcomes. Firms should therefore regularly test whether communications are genuinely understood by customers, particularly where vulnerability or digital exclusion may affect engagement.
The FCA found that firms delivering good consumer outcomes:
defined what “good outcomes” looks like for customers with different needs;
collected and analysed MI on vulnerability and outcomes experienced by customers;
regularly reported to senior management / boards;
used MI to carry out route-cause analysis and to drive improvements; and
embedded learning across the firm.
However, the FCA also identified that in some cases:
firms had identified few or no customers in vulnerable circumstances, limiting the MI available;
boards received limited insight beyond annual Consumer Duty reporting; and
vulnerability data and outcomes information was not consistently recorded, reducing firms’ ability to identify trends and opportunities for improvement.
In practice, firms are unlikely to be able to evidence good outcomes for vulnerable customers without robust MI and meaningful board oversight. The FCA's focus in this area illustrates a continued expectation that senior management use vulnerability data proactively to challenge, monitor and improve customer outcomes over time.
When using intermediaries as part of their payment services / e-money model, firms are required to take reasonable steps to understand how distribution arrangements affect customer outcomes.
Good practice includes:
collecting MI on intermediary performance;
monitoring complaints and outcomes for customers served by intermediaries; and
providing training to intermediaries’ staff on how to identify and support customers in vulnerable circumstances.
Conversely, in some cases the FCA found that:
firms had limited visibility of vulnerability within customer groups served by intermediaries; and
there were opportunities for greater engagement with intermediaries to support good customer outcomes.
Firms should remember that outsourcing customer interactions to intermediaries does not remove their responsibility under the Consumer Duty. Effective oversight requires ongoing monitoring, dialogue, and challenge to ensure that vulnerable customers receive appropriate support regardless of how products or services are distributed.
The FCA's findings provide a useful benchmark for payments and e-money firms assessing their compliance with the Consumer Duty. Whilst the publication does not introduce new regulatory requirements, it offers valuable insight into the standards the FCA increasingly expects to see in practice.
In particular, the FCA's focus on effective identification of vulnerability, consistent but tailored customer support, outcomes monitoring and robust governance demonstrates that firms must be able to evidence not only that appropriate policies and processes exist, but that those policies are operating effectively and delivering positive customer outcomes. Firms that are unable to demonstrate this may find it difficult to satisfy the FCA that they are meeting their Consumer Duty obligations.
Payments firms should therefore take this opportunity to undertake a gap analysis against the FCA's good and poor practice examples. In particular, firms should review how vulnerable customers are identified and recorded, whether support arrangements are tailored to the needs of their customer base, the adequacy of MI used to monitor outcomes and the effectiveness of oversight arrangements where services are distributed through intermediaries.
Firms should also consider whether existing testing, assurance and governance processes provide sufficient evidence that vulnerable customers are receiving good outcomes in practice. Taking proactive steps now will help firms demonstrate compliance with the Consumer Duty and reduce the risk of adverse supervisory attention in this area.
For any support or further information, please contact one of our financial regulatory team below.
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