The regulator found many examples of good practice, but also published further guidance and case studies to help firms address areas for improvement.

By Rob Moulton, Nicola Higgs, Becky Critchley, and Charlotte Collins

On 7 March 2025, the FCA published findings from its review of firms’ treatment of vulnerable customers, along with new examples of good practice and areas for improvement. The regulator then ran an event on 11 March to discuss these findings. The review aimed to evaluate whether firms were providing appropriate support to vulnerable customers, and to help inform the FCA as to whether its 2021 Guidance for firms on the fair treatment of vulnerable customers (FG21/1) needed updating in light of the Consumer Duty. It focused on the actions firms have taken to understand and respond to vulnerable customers’ needs, as well as the outcomes experienced by vulnerable customers.

The treatment of vulnerable customers has been an important area of focus for the FCA, both under the Consumer Duty and beforehand. In 2024, it issued three fines relating to the unfair treatment of customers in financial difficulty. Therefore, firms should expect the FCA to keep monitoring this area closely.

Key Findings

The review found numerous examples of vulnerable customers reporting positive behaviours by firms, such as offering tailored support. Overall, the FCA acknowledges this is a difficult area for firms to get right, and that most firms are trying to do the right thing. The FCA found that, since the implementation of the Consumer Duty, many firms had placed an even sharper focus on supporting vulnerable customers. However, it also found that vulnerable customers continue to experience challenges, and may not consistently receive outcomes in line with those experienced by non-vulnerable customers, particularly when they display multiple drivers of vulnerability. Specifically, the FCA highlights that many firms are not doing enough at the design stage to ensure that products and services meet a spectrum of needs.

Further, consumer research conducted by the FCA as part of its review revealed that the majority of consumers with characteristics of vulnerability have not disclosed their circumstances to their financial services providers, with only four in ten choosing to do so. Of these, only around half were encouraged by the provider to disclose their circumstances. Approximately a quarter of vulnerable customers said they feel uncomfortable explaining their situation to their financial services providers. However, most individuals who had disclosed their situation reported positive experiences and outcomes. This suggests that firms can focus on helping to build trust with customers and encouraging them to share their needs.

Firms reported that they find the existing guidance in FG21/1 clear and helpful, particularly the definition of vulnerability. However, firms suggested that they would find additional case studies useful, as well as further guidance on how to treat customers who do not disclose vulnerability. Consequently, the FCA has published a new webpage including more practical examples for firms. All examples cited below come directly from the FCA webpage.

Good Practices and Areas for Improvement

Governance and Outcomes Monitoring

The FCA observed that firms which had clearly defined good outcomes could more effectively monitor outcomes for vulnerable customers. Good quality data also helped firms to make evidence-based assessments of customer outcomes. The FCA found that firms often find it challenging to monitor outcomes for customers in vulnerable circumstances, have underestimated the depth of monitoring required, or choose only to monitor readily available data. The FCA highlights that firms often monitor the outputs of processes rather than focusing on customer outcomes. It suggests that firms may wish to use wider sources of data such as direct customer feedback, behavioural insights data, or data on the take-up of additional support. At the FCA’s event, the speakers suggested using individual customer stories to bring MI to life, rather than just looking at statistics.

Example: A lender cross-referenced credit application rejection data by customer support needs captured in the application process. This revealed that customers with extra mobility needs were being automatically declined at a high rate, indicating they might be receiving poor outcomes. This triggered an investigation, which discovered that customers with mobility needs who stated their main source of income as benefits were automatically declined due to an auto-decisioning policy. Based on this insight, the lender reviewed this policy to make sure customers with mobility needs would receive fair outcomes in the future.

Other good practices included using data to identify areas for improvement and escalating issues appropriately, based on clear thresholds. The regulator highlights that firms are often either not doing enough to identify areas of concern, or are not acting on concerns appropriately. The FCA also emphasises that firms should review the effectiveness of their interventions, and consider improvements across a whole product or service rather than only undertaking targeted interventions based on individual customer outcomes.

Example:   As part of a proactive review of customer journeys and business processes, a firm carried out a deep dive into early withdrawals from fixed-term savings products.   It identified occasions when customers in vulnerable circumstances had been charged early withdrawal penalties in line with the product terms and conditions, but in circumstances where the firm didn’t feel it was fair to do so.   The firm contacted the affected customers to refund the penalty they were charged.   It also created a temporary process where early withdrawals were reviewed by a senior manager to make sure penalties weren’t unfairly charged by staff strictly following the product terms and conditions. This process aimed to gather insights that fed into new internal guidance on handling early withdrawals.

Finally, genuine engagement by senior leadership often improves how firms approached vulnerability. The FCA found that less than half of firms had formal governance bodies or committees that oversee and can influence outcomes for customers in vulnerable circumstances. It observes that firms with appropriate formal governance tend to have more effective approaches.

The FCA also outlines detailed prompts for how a firm might monitor outcomes effectively, providing a useful checklist for firms to consult and use as a benchmark.

Consumer Support

Good practices include taking steps to identify signs of vulnerability and encouraging customers to disclose their needs. This is particularly important given that the FCA’s research revealed many customers may be reluctant to share this personal information. The regulator encourages firms to use centralised systems to store information about customers’ needs so they can be accessed across the business. It emphasises that customers should not be made to repeat their needs every time they contact a firm. However, vulnerabilities are often fluid so firms should also ensure they can monitor how customers’ needs change over time. At the event, the panel discussed the usefulness of applying metrics on a scale such as “potentially vulnerable”, “likely vulnerable”, and “vulnerable” to capture different cohorts.

Example:   A firm had prompts based on real-time speech analytics that would automatically appear for frontline staff when a customer said a word or phrase that could indicate a potential characteristic of vulnerability.   This helped staff identify support needs.

The FCA recommends that firms should provide frontline staff with guidance, process manuals, and specific training on how to respond to customers with particular characteristics of vulnerability. It also suggests retaining specialist support teams for customers with particularly complex needs, such as a team to handle bereavement cases. Further, the regulator highlights that firms might consider removing or adjusting performance targets related to call times and volume of cases for frontline staff dealing with customers in vulnerable circumstances, to ensure that incentives are not misaligned with good customer outcomes.

Example:   A customer told their bank their rent had increased and they were suffering from anxiety.   The bank offered courtesy phone calls every 3 weeks to check in and give the customer a chance to ask for help. The customer felt more confident about their finances and had greater trust in their bank as a result.    The bank made sure that the same staff member phoned the customer each time. This made the customer feel like someone was looking out for them and avoided them having to repeatedly explain their situation.    This bank demonstrated best practice in ensuring their customer felt supported.

The FCA emphasises that most positive experiences occur when firms provide tailored support and adapt processes to customers’ needs. It suggests firms should build in flexibility so that staff do not feel compelled to adhere rigidly to standardised processes. Firms should also consider from the outset how processes might need to be adapted for different needs and ensure that different options are available. The FCA spotlights as good practice firms implementing governance forums to develop bespoke customer solutions, providing senior oversight and the ability to respond to specific customer needs.  

Example:   A customer with cystic fibrosis was limited in how much they could work.    They told their bank that their tight finances meant they should not have an overdraft.    The bank invited the customer to regular in-branch meetings to discuss their finances. At the first meeting, the customer felt comfortable enough to disclose their cystic fibrosis. Using information offered in the meetings, the customer opened a savings account and began to save regularly, which helped build their financial resilience.    This firm demonstrated best practice in providing proactive support that could respond flexibly to the customer’s need.

Consumer Understanding

The FCA suggests that firms should ensure they design and review communications to ensure clarity, avoiding jargon wherever possible. This includes tailoring communications when necessary and allowing customers to access information through appropriate communication channels. For example, ensuring face-to-face or telephone options are available for customers who are digitally excluded. The FCA indicates that firms could consider removing generic information from communications to make them shorter and easier to digest, and ensuring they signpost additional sources of guidance and information.

Example:   One firm reviewed and amended 140 separate pieces of consumer information to make sure they were written in clear and intelligible language.   They used plain English guidelines, avoided using jargon whenever possible and explained unfamiliar terms.   They also reformatted documents, with changes that included using accessible fonts/font size, bullet points, short sentences, short paragraphs and increasing spacing of content.

The FCA found firms that had improved communications had taken steps to provide these communications in a timely manner and at appropriate touchpoints in the customer journey. It stresses the importance of timely communications, particularly when customer circumstances create a heightened sense of urgency.

The FCA also highlights effective consumer testing as a useful method for assessing whether communications meet customer needs, and notes not all firms are testing as much as they could be. The FCA expects that, wherever possible, firms test their communications before sharing them with customers, and then periodically to ensure effectiveness.

Example:   A firm assessed its customer channels, supported by customer insight testing. This included evaluating whether customers were receiving the right information at the right time across key onboarding and servicing journeys.   Using customer insights, the firm updated product information to include a “key features” section and summary with links to more detailed explanations.   Each time a new or amended communication is proposed, the firm assesses the communication needs of customers in vulnerable circumstances.   They use a common set of principles to make sure information is appropriate and easily understood.   Monitoring of communications effectiveness is ongoing, using customer outcome dashboards and other data and key indicators, such as complaints, customer insights and feedback. This process is overseen by the firm’s customer forum.

Products and Services

The FCA considers that firms are yet to make significant progress in product design and suggests it ought to be a priority area. The FCA expects firms to design products and services to avoid potential harmful impacts as well as ensure products and services meet the needs of customers in vulnerable circumstances. At the event, the speakers suggested that embedding these considerations from the start and standardising inclusivity would really help firms to navigate this difficult area. The FCA emphasises that product design staff should have the appropriate skills to understand and consider the needs of vulnerable customers. It observes that few firms are training product and service design staff on vulnerability, and those that do may not provide sufficient training.

Good practices include embedding inclusive design principles into the product design process, working with charities or vulnerable customers to better understand the needs associated with certain vulnerabilities, and evaluating how customers in vulnerable circumstances use products as part of product reviews. The FCA emphasises that its research showed customers in vulnerable circumstances still struggle to find products and services that meet their needs.

Example:   To make sure impacts on customers in vulnerable circumstances were fully incorporated into product reviews, a firm set out explicit and detailed questions in their product review framework.   The extra level of detail prompted staff to:   1. Consider whether management information indicated that customers in vulnerable circumstances were more likely to take out a given product or incur fees. 2. Identify features of the product that could cause foreseeable harm. The firm also included vulnerability in its risk assessment framework for product governance, so it was prominent as a possible risk indicator.

Next Steps

In light of the feedback received, the FCA has decided that its existing guidance in FG21/1 remains appropriate, so it will not be updating the guidance at this juncture. Further, it will not introduce any new requirements for firms around the treatment of vulnerable customers. However, the regulator expects firms to review and use its examples of good and poor practice, and to make improvements where necessary. Firms need to remain focused on ensuring that vulnerable customers receive good outcomes and the FCA will no doubt be keeping a close eye on this area.