Vulnerable customers

How the FCA frames vulnerability

A vulnerable customer is someone who, because of their personal circumstances, is especially susceptible to harm, particularly when a firm does not act with appropriate care. The FCA is clear that vulnerability is not a fixed label attached to certain people; it is a spectrum, and anyone can become vulnerable at any time. A customer may be in a vulnerable situation temporarily, for instance after a bereavement, and then move out of it again.

The regulator groups the causes of vulnerability into four drivers. Thinking in terms of these drivers helps firms recognise that vulnerability can be invisible and that it often comes from circumstances rather than any inherent characteristic.

• Health, such as a condition or disability affecting the ability to carry out day-to-day tasks
• Life events, such as bereavement, job loss or relationship breakdown
• Resilience, meaning low ability to withstand financial or emotional shocks
• Capability, such as low knowledge of financial matters or low confidence managing money

What Consumer Duty requires

Under the Consumer Duty, firms must act to deliver good outcomes for all customers and must pay particular attention to those in vulnerable circumstances. The standard is that vulnerable customers should be able to achieve outcomes as good as those of other customers. This is a meaningful lift: it is not enough to avoid actively mistreating vulnerable customers; a firm must design products, communications and service so that vulnerable customers are not disadvantaged.

The Duty threads vulnerability through its outcomes. Products must suit the needs of the target market including any vulnerable customers in it, communications must be understandable to them, and support must not be harder for them to access. Where a firm cannot evidence that it is meeting this standard, it has a gap to close. The emphasis on evidence is deliberate: the regulator expects firms to monitor outcomes for vulnerable customers and to be able to show, with data, that those outcomes are as good as for everyone else, rather than simply asserting that they treat all customers fairly.

Identifying and responding to vulnerability

Because vulnerability is often not disclosed and may not be obvious, firms need ways to recognise it. Front-line staff should be trained to spot signs and to respond with flexibility, and systems should make it easy to record a customer's needs, with consent, so that the customer does not have to repeat a difficult disclosure at every contact. Data signals, including affordability and resilience indicators from Open Banking, can also flag that a customer may be struggling.

Recognition only matters if it changes behaviour. A firm should have practical responses ready, such as additional time, alternative communication formats, forbearance on repayments, and signposting to free debt advice or specialist support, rather than treating a disclosed need as a box to tick.

Vulnerability across the lending lifecycle

Vulnerability is relevant at every stage, not just in collections. At origination, low resilience or capability may mean a loan that looks affordable is not genuinely suitable. During the life of the agreement, a life event can change a customer's situation overnight. In arrears, vulnerability should shape how a lender engages and what forbearance it offers.

The aim is proportionate care, not blanket caution. Treating someone as vulnerable should open up support and flexibility, not close down access to credit they can sustain. A lender that understands its customers well enough to tell the difference, and acts on it, is both meeting the Duty and reducing the risk of avoidable harm and the losses that follow it.

Done properly, attention to vulnerability improves the service every customer receives, not only those who disclose a need. Clearer communications, flexible contact options and genuine forbearance are good practice across the board, and a firm that designs for its most exposed customers tends to raise the standard for the whole book rather than carving out a separate, lesser track for the people who most need care.