Kevin Still and Chris Warburton caught up to discuss the recent FCA vulnerability process review webinar, and other outcomes such as the study on Consumer Outcomes. Plenty going on at the moment and signalling what may be needed going forward for the industry.
A dive into the FCA’s recent webinar on consumer vulnerability, highlighting key takeaways, regulatory themes, and the evolving landscape of consumer protection. The discussion industry gaps in vulnerability testing, the role of digital and AI solutions, and increasing scrutiny on governance and training. Additionally, the upcoming motor finance redress scheme and its implications for firms were explored, alongside cross-sector best practices in managing consumer vulnerability.
Key Takeaways
- Vulnerability Testing Gaps – 29% of firms are not testing their products for vulnerability-specific needs, highlighting a compliance gap.
- Digital vs. Non-Digital Preferences – Consumer vulnerability concerns mean that non-digital engagement methods remain essential.
- Regulatory Messaging Repetition – The FCA’s webinar largely reinforced previous guidance rather than introducing new regulatory developments.
- Board-Level Oversight Deficiencies – 39% of firms lack structured forums to assess consumer vulnerability and poor outcomes.
- Consumer Outcomes Focus – The FCA continues to prioritise outcome monitoring, consumer understanding, and fair value assessments.
- Debt Sector Under Scrutiny – The FCA has increased regulatory focus on the debt sector with further data requests and surveys.
- Motor Finance Redress – The FCA is preparing a large-scale compensation process for mis-sold motor finance commissions.
- Senior Management Accountability – The FCA is intensifying scrutiny on senior management functions to ensure adequate governance and bandwidth.
- AI and Customer Engagement – AI’s role in vulnerability detection and customer interactions requires clear governance and compliance oversight.
- Training and Frontline Readiness – Firms must continue investing in training, ensuring employees are equipped to support vulnerable customers.
- Customer Support Complexity – Firms must move beyond traditional transactional measures and use sophisticated data to track consumer outcomes.
- Cross-Sector Best Practices – Regulatory expectations on consumer vulnerability are expanding beyond financial services into utilities and other regulated industries.
Innovation
- AI for Consumer Understanding – AI-powered analytics and speech recognition tools are being explored to enhance customer interactions.
- Scalable Redress Models – The upcoming motor finance redress system will be a large-scale test of consumer engagement under regulatory scrutiny.
- Digital vs. Human Blended Engagement – Firms are experimenting with digital and hybrid engagement models to better support vulnerable customers.
- Product Assurance Frameworks – New models integrate vulnerability considerations into product lifecycle design and risk management.
Key Statistics
- 29% of firms do not test their products for vulnerability-specific needs.
- 39% of firms lack structured forums to assess consumer vulnerability and poor outcomes.
- 34% of consumers have poor or low numeracy skills, impacting financial decision-making.
- 84% of the population now use smartphones, yet digital financial solutions remain underutilised for vulnerable customers.
- £30bn in provisions may be required for motor finance redress.
Key Discussion Points
- The FCA webinar focused on reinforcing existing vulnerability expectations rather than introducing new insights.
- A significant number of firms still do not have structured governance for reviewing vulnerability issues.
- The FCA continues to highlight the importance of consumer understanding and monitoring customer outcomes.
- The debt sector remains under active regulatory review, with additional data collection and surveys ongoing.
- The upcoming motor finance redress scheme could impact millions of consumers and test firms’ customer engagement strategies.
- The FCA is increasing scrutiny on senior management functions, particularly around governance and bandwidth.
- Firms need to ensure digital solutions are accessible to all consumers, especially vulnerable groups.
- Training remains critical, with a need for ongoing investment in employee competency.
- AI-driven engagement solutions are growing, but firms must implement clear governance and compliance structures.
- The FCA’s regulatory messaging often repeats previous guidance, raising concerns about regulatory fatigue among firms.
- Consumer vulnerability guidance is evolving, with expectations for improved data tracking and monitoring frameworks.
- Best practices from financial services are influencing regulatory expectations in other sectors, such as utilities.
Links and Resources
- Presentation material
- Insights: FCA Vulnerable Customers Review – 2025 Update – Webinar
- 10 Principles for designing vulnerable consumer data-sharing programmes
- Insights: FCA Review into firms’ treatment of customers in vulnerable circumstances
- Insights: FCA Consumer Support Outcome: Good Practices and Areas for Improvement
- Insights: FCA research into experiences of consumers in vulnerable circumstances
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