Consumer Duty consultancy firm MorganAsh warned that the regulator was using its Section 165 powers to issue notices to firms and request that they provide more information on the monitoring of client vulnerability in compliance with the incoming rules.
The firm said it was made aware of this when its managing director Andrew Gething (pictured) was approached by a firm who had received a notice from the regulator.
As part of Consumer Duty rules, firms are required to make sure they reduce consumer harm and offer positive outcomes. The rules were published in July and firms were called to submit their plans by October. Consumer Duty will be fully implemented by July 2023 and providers have until April to inform intermediaries of how this will be put into practice.
MorganAsh said understanding and communicating vulnerability was “key”.
The firm assessed its own consumer data on potentially vulnerable people and found that it recorded higher numbers than what was reported by regulated firms and collected by the FCA’s Financial Lives Survey.
MorganAsh is claiming this discrepancy is because of variances in how vulnerability is measured by firms.
Gething said: “The key issue is there are still firms who are only reporting the proportion of vulnerable customers in single figures. The reality is they are just not assessing their customers or recording their vulnerability in any sort of consistent manner.
“It therefore comes as no surprise to see the FCA flexing its muscles and issuing notices in preparation for July.”
He added: “A simple measure is to understand the proportions of vulnerable consumers being identified.
“We are seeing results slightly higher than the FCA Financial Lives Survey, but this is probably due to the cohorts of customers we are starting with, where there are proportionally more vulnerable. Nonetheless, the data shows the clear disparity in vulnerability assessments. It should all serve as a reminder to firms that a consistent approach to vulnerability assessments is necessary to produce the required data for both the regulator and for Consumer Duty.”
