MorganAsh has backed the FCA’s latest warning that firms must take a more proactive approach to identifying and supporting vulnerable customers.
The call follows the regulator’s consumer understanding review, which found that while some firms have made progress under Consumer Duty, others still have vague or underdeveloped policies for identifying customers with characteristics of vulnerability or lower financial capability.
The FCA said some businesses continue to rely too heavily on general staff awareness rather than clear processes that can identify issues earlier and track whether interventions are improving outcomes. It also highlighted cases where firms had “considered vulnerability” but could not explain how this translated into practical changes.
For mortgage and financial services firms, the findings underline growing regulatory pressure to move beyond reactive models, where support depends on customers disclosing issues or advisers identifying problems at a later stage.
MorganAsh said the regulator’s position reflects a long-standing industry challenge. The firm has previously argued that relying solely on reactive approaches risks leaving large numbers of vulnerable customers unidentified and unsupported.
Andrew Gething (pictured), managing director of MorganAsh, said: “We welcome the regulator’s call for proactive, as well as reactive approaches – something we have been campaigning on for some time now.
“The findings from the FCA’s review show that many firms are still relying too heavily on customers to disclose their own vulnerabilities, or on staff to identify issues only once they are visible. In practice, this reactive approach means most vulnerable customers remain unidentified and hence unsupported.
“Where firms rely solely on reactive methods, they typically identify vulnerable customers in the single figures and fall far short of reality. They also fail to gather the quality of data needed to understand the extent of vulnerabilities and what outcomes they are receiving.
“Ideally reactive methods should use the same classification methodology to ensure consistency in the data captured, regardless of the method.
“Technology continues to be the differentiator, enabling firms put the necessary systems and processes in place to achieve this in an efficient, cost-effective and compliant manner.
“The new CII guidance sets out a clear blueprint for firms of what is necessary in terms of IT systems, classification and data infrastructure to not just identify and classify, but monitor, support and report on customer vulnerabilities and outcomes.”
MorganAsh said firms using reactive methods alone typically identify between 1% and 5% of vulnerable customers, significantly below the levels indicated by the FCA’s Financial Lives survey.
The firm added that a purely reactive approach can only be justified where businesses can evidence robust processes, clear benchmarking and no worse outcomes for vulnerable groups.
