The ongoing cost of living crisis continues to place significant financial and emotional pressure on many consumers across the UK. As a result, FCA-regulated firms are expected to take greater care in identifying and supporting vulnerable customers.
Under Consumer Duty, businesses must consider how rising living costs may affect customer outcomes, financial resilience and decision-making.
At My Compliance Consultant, we help firms understand FCA expectations around vulnerability, customer support and Consumer Duty compliance.
How the Cost of Living Crisis is Increasing Vulnerability
Financial vulnerability can affect people in many different ways. However, rising household bills, higher interest rates and increasing living costs have created additional pressure for many consumers.
Consequently, customers who may not previously have been considered vulnerable may now be struggling financially or emotionally.
Examples may include:
- Difficulty paying essential bills
- Increased debt or arrears
- Anxiety or stress linked to finances
- Reduced financial resilience
- Reliance on credit or borrowing
- Difficulty understanding financial options
In addition, vulnerability may become temporary or fluctuate depending on personal circumstances.
Why FCA-Regulated Firms Must Respond
The FCA expects firms to recognise how economic pressures may affect customers. Therefore, businesses should ensure staff are trained to identify signs of vulnerability and respond appropriately.
Under Consumer Duty, firms should focus on delivering fair outcomes and avoiding foreseeable harm.
This may include:
- Providing clear communication
- Offering appropriate support
- Allowing additional time for decisions
- Identifying signs of financial distress
- Reviewing customer journeys and processes
Furthermore, firms should ensure vulnerable customers are not disadvantaged by poor communication or inflexible processes.
Recognising the Signs of Financial Vulnerability
Customers experiencing financial pressure may not always openly discuss their situation. Consequently, frontline teams should understand the potential indicators of vulnerability.
Signs may include:
- Missed or late payments
- Emotional distress during conversations
- Confusion around products or services
- Difficulty understanding information
- Requests for repeated explanations
- Changes in behaviour or communication patterns
Importantly, staff should approach these situations with sensitivity, professionalism and empathy.
Vulnerability Training and Consumer Duty Support
At My Compliance Consultant, we support firms through consultancy services, compliance reviews and staff training focused on vulnerability and Consumer Duty requirements.
In addition, businesses can access Vulnerable Customers training through My Compliance Academy.
The course is available as:
- Part of our wider FCA compliance training programme
- A standalone Vulnerable Customers module for staff development and refresher training
Furthermore, the training helps teams better understand vulnerability, financial distress and FCA expectations during periods of economic pressure.
Supporting Better Customer Outcomes
The cost of living crisis continues to create challenges for both consumers and regulated firms. Therefore, businesses should ensure vulnerability awareness remains an active part of compliance and customer care strategies.
Recognising and supporting vulnerable customers is now a key expectation under Consumer Duty and wider FCA regulation.
Find out more about consultancy support and Vulnerable Customers training get in touch or visit our Courses page.
