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Vulnerable customers: The FCA’s New Consumer Duty is everyone’s duty.

Inclusive design isn’t just a job for an accessibility team anymore. This is for everyone. It’s great news for vulnerable customers, but we anticipate it will be a significant challenge for many FS firms.
Sarah Ronald

Sarah Ronald

Founder. Leader. Investor. Sarah's spent 20 years working with changemakers around the world to build better businesses through digital and design-led transformation.

We welcomed the recent publication of the FCA policy statement and guidance last week. As an inclusive design practice working in financial services, reading the policy guidance gets us excited. 

Yes. I know. But stick with me.

The FCA has just tied their guidance about the fair treatment of vulnerable customers to their new consumer duty legislation. This effectively mandates the use of inclusive design across every customer touchpoint with a financial service provider – something Louise recently wrote about.

This is an outstanding result for customers. But make no mistake – it’s also going to be a seismic shift for many FS firms, and will be challenging for many to deliver over the next 12 months.


Guidelines are becoming duty.

In early 2021 the Financial Conduct Authority (FCA) introduced guidelines around the fair treatment of vulnerable customers. They define a vulnerable customer as:

someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care.

FG21/1: Guidance for firms on the fair treatment of vulnerable customers

This is broken down further in their four drivers of vulnerability, which is well worth a read.

But that was just guidance. It was a set of very good suggestions, but lacked teeth. Nobody was going to court if they didn’t follow it. Now that’s changing. And the clock is ticking.

The new Duty from the FCA (issued late in July this year, and coming into force in July 2023) effectively brings many of the previous guidelines into regulatory enforcement. It’s called out explicitly in the introduction:

“We expect consumers with characteristics of vulnerability to benefit from the overall improvements in outcomes delivered as a result of the new Duty…

Section 1.27 FG22/5 Final non-Handbook Guidance for firms on the Consumer Duty

Who are vulnerable customers?

The FCA’s four drivers of vulnerability make it easy to recognise the breadth of possible vulnerabilities, many of which we might recognise as having experienced ourselves.  Vulnerability is broad, transient, and situational. When it comes down to it, anyone can be vulnerable at any time.

And this is the crux that Inclusive design tries to address. It’s about designing for all. Being fully human centred and learning to leave our subconscious biases and stereotypes at the door.

Nile Associate Phil, sitting in front of a vulnerable customer insight project mind palace
Nile Associate Phil, sitting in front of a customer insight project ‘Mind Palace’

This is going to challenge FS firms

So if you’re in financial services, you might have thought, great. Good news, right? We’ll email this over to our accessibility teams and get on with it.

Nope.

This is bigger than that. Better than that. The FCA has done two quite clever things:


First, the Duty expects firms to minimise foreseeable harm to any customers in their target market – not some ‘average’ customer.

In response to sensible pressure, the FCA removed reference to serving a hypothetical ‘average customer,’ in the final rules of the Duty, recognising that it might lead to a whitewashing of vulnerability. 

Instead, firms are required to effectively serve “customers in their target market”:

“we want firms to focus on the customers they actually serve, not a hypothetical average”

PS22/9 Section 10, FCA response to Q13


Second, the guidance makes it clear that any customer can be a vulnerable customer. 

Given the guidance’s (appropriately) expansive understanding of vulnerability, all or any of those customers in that target market could be a vulnerable customer (and cannot be expected to disclose this to the service provider).

Chris Fitch from the Money Advice Trust has highlighted this clearly in his excellent post on the subject

…the FCA has confirmed something that most firms have known for a long time: that they are now expected to meet many of the conduct standards for all customers that were  trialled in the previous FCA guidance on vulnerability… the FCA has given financial service firms a framework of expectations which will significantly challenge them.

Chris Fitch: The FCA’s Consumer Duty: what is foreseeable harm? And why does it matter?

Nile is helping teams find the path to progress

Some of our more far-sighted FS clients anticipated this change coming down the line last year.

Our teams have been working in partnership with them to explore what effectively serving vulnerable customers really means. And the changes, for many, are seismic. Shifting to a culture of inclusive design and protecting vulnerable customers doesn’t live in the accessibility team or the call centre. It’s everywhere, all at once. 

But the benefits are huge.

Over the last year we’ve helped FS firms build design and research toolkits, launch new customer engagement techniques, publish new archetypes for inclusive design, launch grassroots campaigns and cultural change initiatives, and build new guidelines and steering committees for their organisation.

From the legal team writing the T&Cs of a new product, to the QA team running tests on a new implementation of an app – we’re seeing almost everyone benefit from an updated understanding of customer vulnerability and the implementation of inclusive design.

And if you were in any doubt, the FCA have recently agreed with us:

“Firms may wish to consider taking an inclusive design approach to meet the needs of customers in their target market, including those with characteristics of vulnerability.”

Section 6.31 – FG22/5 Final non-Handbook Guidance for firms on the Consumer Duty

Learn more

With the FCA clock ticking this could feel like an intimidating challenge. But I urge you not to bury your head in the sand about this.

If you’d like to talk this over, I want you to get in touch with me or our friendly client partner team.

This year in particular, the Nile team are focusing on supporting our client build their inclusive design practices and furthering their understanding of vulnerable customers. We’d love to hear from you.

Further reading