The Financial Conduct Authority thinks the pandemic shows why questions of vulnerability should concern us all. Our guest, Sheldon Mills, explains why.
This is a guest post by Sheldon Mills. All views expressed are Sheldon’s own and not necessarily shared by Which?.
80% of adults are worried about the effect that the coronavirus (COVID-19) is having on their life. This recent figure from the Office of National Statistics highlights the level of impact the pandemic is having on all of us.
But in this time of crisis it’s vital that we think particularly about vulnerable consumers – who they are and how they are looked after by the businesses that serve them.
For us at the FCA, a vulnerable consumer is someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care.
Our Financial Lives Research found that almost half of UK adults may display one or more characteristics of vulnerability, and this was before the crisis hit.
In more normal times we know that poor health, low financial or emotional resilience, life events such as bereavement or divorce, and capability or cognitive difficulties can cause a consumer to become more vulnerable to harm.
Support during the pandemic
We’ve seen some great examples of good practice from financial services firms reaching out to their vulnerable customers, including banks calling their customers to check if they’re ok, if they need help with their finances, and letting them know about their opening hours.
We recognise that this is a challenging time for staff working from home, often in difficult circumstances themselves. Some staff have been working in branches as key workers in their local communities.
But in this time of crisis we want firms to understand that coronavirus can exacerbate, or suddenly cause, vulnerability in many ways.
Someone losing their income from losing work or being furloughed, the impact of isolation on mental and physical health, and a limited ability to work whilst caring for others.
On a personal note, many of my own family members with health conditions and disability are still restricted in their movement and rely on support. I am lucky that my family members live nearby and are able to take care of them, but many people are without that support.
We are also concerned that consumers impacted by coronavirus, and now in difficult financial circumstances, may not even consider themselves as vulnerable.
We know that money problems, as well as worries about health, bereavement and widespread uncertainty about the world we now live in, bring real challenges for mental health. This in turn can make people more vulnerable.
My teams have been gathering insight from our consumer partners, including Which?, to help us understand in near-real time how the crisis is impacting on the financial lives of consumers across the UK.
The FCA’s solutions
Recognising all this, we brought in a series of measures designed to help all consumers who, as a result of the crisis, find themselves in temporary financial difficulties.
These include our recent announcement about extended support for those who are struggling to pay their mortgage due to coronavirus. So far nearly two million payment holidays have been issued, the equivalent to one in six mortgages.
We’ve also introduced measures on consumer credit such as credit cards, motor finance, high cost credit, rent-to-own.
We’ve also acted to help insurance customers, lowering premiums for consumers in financial difficulty, ensuring firms treat customers fairly when they claim on or purchase travel insurance and intervening to give clarity for small businesses and sole traders looking to rely on business interruption insurance.
This is all alongside other work we are doing to protect consumers including warnings about scams and on pension savings.
Going forward we must not forget those consumers with vulnerabilities or conditions unrelated to coronavirus, including those with cognitive impairment or people with a diagnosis of cancer.
Before the pandemic hit we had published our draft guidance for regulated firms on the fair treatment of vulnerable consumers.
This set out how we think firms should treat vulnerable consumers. We are working now on the next steps and this needs to be thought through carefully in the context of coronavirus. It is in all our interests that we get this right.
If there is one thing this crisis has taught us, it is that any of us can become vulnerable at any time.
This was a guest post by Sheldon Mills. All views expressed were Sheldon’s own and not necessarily shared by Which?.