The Financial Conduct Authority (FCA) has published the final report of its Pure Protection Market Study (MS24/1.5). For most of the industry, the headline is a relief. The FCA isn’t planning new market-wide measures, though it will act where individual firms fall short, and is focusing instead on closing the protection gap. More than that, the FCA has put its weight behind something the industry has wanted for years: getting more of the UK population protected.

For financial services firms, complaints have long stood as both an important measure of customer experience – and a necessary part of regulatory reporting. From January 2027, however, they will serve a third purpose – providing the regulator with greater insight into how firms both identify and support customers in vulnerable circumstances.

Cybersecurity has always been seen as a technical issue, but for financial services firms, it is now much broader than that. It has become a clear governance issue, particularly with Consumer Duty in full force and with the fresh emphasis it has placed on the responsibility of firms to avoid foreseeable harm and ensure good customer outcomes.

When Henry Ford revolutionised transport in the early twentieth century, the story goes that he observed: “If I had asked people what they wanted, they would have said faster horses.” The motor car was not an incremental improvement on what existed – it was a fundamentally different solution to the same problem.

Many firms have historically struggled with collecting customer vulnerability data due to a perceived conflict between the FCA’s Consumer Duty regulations and GDPR. Feedback from firms has consistently highlighted uncertainty in this area, with some even reluctant to collect customers’ vulnerability data at all.

The UK’s Financial Conduct Authority (FCA) expects firms to deliver good outcomes for retail customers, as defined within Consumer Duty. Central to the Duty is proportionality –which enables firms’ approaches to match the nature of the product or service, characteristics of customers, role in the distribution chain, and size/resources of the firm, all under an objective test of reasonableness.

The FCA’s review into the use of AI across retail financial services is a timely and welcome intervention. We already find ourselves in a position where AI is rapidly moving from experimentation to implementation – in all walks of life. Financial services is absolutely no exception.

The new vulnerability guidance from the Chartered Insurance Institute (CII) is a significant step forward for both the insurance and personal finance sectors – and offers much across all of financial services. It provides firms with clear and comprehensive guidance of what ‘good’ looks like when it comes to supporting vulnerable customers.

The Chartered Insurance Institute (CII) and Personal Finance Society (PFS) have been beavering away for much of this year on something which we think is one of the most useful customer vulnerability tools since the TEXAS mnemonic.

When considering what technology to adopt, this checklist should help assess whether systems meet the requirements for effective customer vulnerability management.

Use the following checklist to assess or build a vulnerability data framework. This checklist should quickly pinpoint areas for enhancement and support the assessment of current capabilities against good practice.

Every firm is on a unique journey with its customer vulnerability management strategy, which translates into different levels of operational maturity. This checklist should quickly pinpoint areas for enhancement and support the assessment of current capabilities against good practice.

The Chancellor Rachel Reeves has stated her intention to cut red tape in the financial services sector to help accelerate economic growth. She has called regulation the “boot on the neck” of businesses – signalling a desire to move to a leaner and less risk averse approach to oversight.

How many vulnerable customers should a firm expect to have? The FCA’s Financial Lives survey reports that around 50% of people will be vulnerable at any one time. This seems like too many. Many firms still report single-figure proportions of vulnerable customers, sometimes as low as 1% or 2%. This seems far too few. Why is there such a difference? Why do many firms report such low numbers, and does it matter? 

July marks the second anniversary of Consumer Duty, the FCA’s tentpole regulation designed to set higher standards for financial services and drive better customer outcomes.

As part of Consumer Duty, the FCA asks for firms to consider not only their actions, but also those of other firms across the value chain. One way to achieve this, perhaps the simplest, is to share the individuals’ data. However, many firms don’t recognise the need to do it; some believe this it would be against GDPR or that consumers wouldn’t like it.

Pension annuities have been in the doldrums for many years but are now on the increase. This is due to improved rates and, with changes to pension taxation, they are arguably likely to increase further. Annuities providers turned their attention to bulk annuity contracts with defined benefit pension schemes and this market continues to grow. However, little has changed over the last ten years in terms of retail consumer products and processes. We ask: what needs to change in light of Consumer Duty?