The Financial Conduct Authority (FCA) has conducted a multi-firm review focusing on how retail banks and building societies treat customers in vulnerable circumstances, particularly in situations involving bereavement and power of attorney (PoA). This review highlights both good practices and areas needing improvement, providing valuable insights for retail banks to enhance their customer service and compliance with regulatory expectations under the Consumer Duty.
This review is based on Principle 12 and PRIN 2A in the FCA Handbook, the non-Handbook Guidance for firms on the Consumer Duty (FG22/5), and the Guidance for firms on the fair treatment of vulnerable customers (FG21/1).
In summary, retail banks should focus on enhancing their policies, staff training, and systems to better support vulnerable customers. By addressing the identified areas for improvement, banks can ensure compliance with the Consumer Duty and vulnerability guidance, and improve customer confidence in their services.
Key Findings:
1. Policies and Procedures:
Good practice: Many firms have established clear policies and procedures for handling vulnerable customers, ensuring these are accessible to staff. Some firms have implemented forums for escalating complex cases to develop tailored solutions.
Areas for improvement: There is a need for clearer guidance for staff on handling emergencies and balancing fraud prevention with customer needs. Instances were noted where customers faced delays in accessing funds for essential bills due to procedural inefficiencies
2. Identifying and responding to customer needs:
Good practice: Firms have developed systems allowing customers to disclose their needs, which are accessible across different business areas. Some firms use AI and/or data like transaction patterns to identify potential vulnerabilities in real-time. Firms have training materials to help staff support customers in vulnerable circumstances.
Areas for improvement: Consistent use of systems to record and respond to customer needs is lacking. Training and competency issues were identified, with some staff failing to recognise or respond empathetically to distressed customers in bereavement or PoA circumstances. Some firms did not introduce additional training, or competency checks after staff errors had been identified, risking a recurrence of issues.
3. Outcomes Testing and Monitoring:
Good practice: Firms generally have processes in place to monitor customer outcomes, including analysis of behavioural patterns and feedback mechanisms, including (but not limited to) information on time taken to register PoAs or defund accounts in bereavement cases, complaints volumes and drivers, Net Promoter Score (NPS) surveys, and specific case studies from customers about their experience.
Areas for improvement: Monitoring often lacks depth and clarity, with a need for more comprehensive data to assess customer outcomes effectively. Reports to senior committees sometimes lack detailed commentary. There remains scope for improvement in outcomes testing and monitoring across most of the firms reviewed.
4. Customer Journeys:
Good practice: Firms are adapting customer journeys to be more straightforward and flexible, with some offering dedicated support teams and communication channels for bereavement and PoA cases.
Areas for improvement: Limited access channels for attorneys and fragmented CRM systems can hinder efficient case management, leading to repeated information requests and delayed processes. The FCA encourages firms to continue to design their customer journeys with customers in vulnerable circumstances in mind, particularly for critical services such as bereavement and PoA.
Next Steps: The FCA has communicated its findings to all firms involved in the review, outlining expected improvements. Retail banks are encouraged to continue refining their approaches to ensure they meet the needs of customers in vulnerable circumstances effectively.
