Campaigners celebrate as FCA backtracks on definition of 'vulnerable customers'

By agency reporter
July 18, 2018

The Money and Mental Health Policy Institute joined other campaigning charities celebrating as the Financial Conduct Authority reversed proposals for a heavily criticised new definition of ‘vulnerable consumers’.

In November 2017, the regulator began consulting on its ‘Approach to Consumers’ paper, which included proposals to change the definition of ‘vulnerable consumers’. Campaigning charities including Money and Mental Health, Macmillan, Stepchange and the Money Advice Trust argued that the proposed new definition watered down firms’ responsibilities to proactively identify and support vulnerable customers, as well as specifically disadvantaging people with ‘hidden’ conditions like mental health problems.

The proposed new definition stated that vulnerable consumers must be ‘readily identifiable’. Mental health problems can make it practically hard to communicate with banks and other companies to ask for help, are less well understood by call centre operatives, and stigma acts as a further barrier to disclosure. As a result, mental health campaigners argue that few mental health problems would be considered ‘readily identifiable’, and the proposed definition could lead to banks and other financial services providers leaving this group of customers without support.

On 17 July 2018, the Financial Conduct Authority published its response to the consultation, backtracking on the proposed new definition. Instead the regulator will revert to the existing definition and consult on new guidance for firms on how to identify and support vulnerable customers.

Responding to the announcement, Helen Undy, incoming Director of the Money and Mental Health Policy Institute said: “This definition is the sort of small print that really matters – in this case, the wording will determine who gets additional support from their bank or credit card company, and who doesn’t. The existing definition of vulnerable customers is clear, concise, and places appropriate responsibility on firms to take action, so we were surprised and disappointed by the proposal to change it. The new wording risked specifically disadvantaging people with mental health problems and other less ‘visible’ conditions, which was clearly not the FCA’s intention. It is to the regulator’s credit that they have listened to the concerns of campaigners, and it shows what the sector can achieve when we work together.”

* Money and Mental Health Policy Institute


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