Regulator's research reveals why
Only four in 10 vulnerable customers inform their financial services provider about their circumstances, leaving many without the support they need, a new study by the Financial Conduct Authority (FCA) has found.
Among those who disclosed their situation, 74% said staff asked appropriate questions to understand their needs, 57% felt their provider showed care, and 58% reported receiving necessary support.
Despite these findings, vulnerable customers are more likely to report negative experiences with financial services firms, such as banks and insurers. The research shows that 44% of vulnerable customers had a negative experience, compared to 33% of non-vulnerable customers.
The study also highlights several reasons why customers hesitate to disclose their circumstances. A quarter of those in vulnerable situations said they felt uncomfortable sharing their personal details. The most common concerns include embarrassment (37%), fear of being treated differently (24%), and worry about receiving a worse deal (23%). Others were unaware that their firm could help (19%), had security concerns (16%), or believed their circumstances did not affect their financial situation (16%). Some simply felt disclosure was not relevant (11%).
The FCA has taken steps to address these concerns. In 2021, it issued guidance for firms on supporting vulnerable customers, followed by the introduction of the Consumer Duty in 2023. The Consumer Duty requires financial firms to ensure good outcomes for all customers, including those in vulnerable circumstances. To reinforce this, the FCA has now published a review outlining good and poor industry practices.
Sarah Pritchard (pictured), the FCA’s executive director of competition, markets and international, acknowledged the challenges customers face in disclosing their needs.
“It can be hard to tell your bank or insurer about your specific needs but those who ask for help tend to feel more supported,” she said. “We’ve seen good examples where financial firms are making a difference for vulnerable customers, but we know that vulnerable people report more negative experiences than others. We want firms to build on the good work identified, to help people open up and make sure they get the support they may need.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
