FCA Urges Payment Firms to Test Vulnerable Customer Support Under Consumer Duty

Key Takeaways

• The FCA published findings from its consumer vulnerability review of payments and e-money firms.
• It found that the best outcomes came from firms that understood their customers and tested whether their support worked in practice, rather than relying on policies alone.
• Compliance teams should treat this as a supervisory signal that firms need evidence of good outcomes for customers in vulnerable circumstances, regardless of firm size.

Deep Dive

The FCA published findings from its consumer vulnerability review of payments and e-money firms. It found that the best outcomes came from firms that understood their customers and tested whether their support worked in practice, rather than relying on policies alone. Compliance teams should treat this as a supervisory signal that firms need evidence of good outcomes for customers in vulnerable circumstances, regardless of firm size.

The central message is that having policies, training materials, and procedures is a good start but does not guarantee good outcomes. The strongest firms checked whether their arrangements worked in practice, using management information, complaints data, customer feedback, and quality assurance, and they changed what was not working. The FCA also highlighted low-cost interventions. One payments provider serving small businesses, for example, offered callback support to customers with limited IT literacy and avoided costly new systems. For smaller firms, the FCA suggests board or senior management regularly reviewing the number of customers in vulnerable circumstances identified, the types of vulnerability seen, and how these link to complaints data.

The FCA also set out five questions every firm should be able to answer:
- Do we understand the vulnerabilities most relevant to our customers?
- Are we identifying and supporting customers consistently?
- Can we demonstrate that our approach leads to good outcomes?
- Where something is not working, are we learning and improving?
- Does our board or senior management receive enough information to judge whether these customers are getting good outcomes?

The FCA states that firms can be flexible in how they meet their obligations. The published review includes sections on proportionate approaches for smaller firms. No deadlines or implementation dates were set.

Recommended actions:
- Perform a gap assessment against the five questions and document the answers.
- Review the full published review, "Payments firms: delivering good outcomes for consumers in vulnerable circumstances," and benchmark current practices against it.
- Establish or enhance board-level and senior management reporting on vulnerability identification, vulnerability types, and links to complaints.
- Build outcome-testing into the second and third lines of defense, such as quality assurance sampling and complaints root-cause analysis.
- Keep records of changes made in response to findings, which will evidence continuous improvement.

Risk implications: The main exposure is conduct and supervisory risk. Firms that rely on policies without outcome evidence may be seen as falling short of Consumer Duty expectations and could face supervisory follow-up or remediation. Poor vulnerability handling can also drive complaints, reputational damage, and customer harm, particularly where payment access affects salaries, bills, and household finances. Because the expected steps are low-cost and proportionate, resource constraints will be a weak defense for inaction.

Source: Financial Conduct Authority