Occasional Paper No. 8: Consumer Vulnerability

Published: 23/02/2015     Last Modified: 24/02/2015

Stimulating debate and interest around the subject of consumer vulnerability so that firms better understand the issue and act appropriately.

Occasional Paper No. 8: Consumer Vulnerability [PDF] (6MB)

Industry leaders give their thoughts on consumer vulnerability

Read the transcript [PDF]

About Consumer Vulnerability

A vulnerable consumer is someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.

Much consumer protection legislation is underpinned by the notion of the average or typical consumer, and what they might expect, understand or how they might behave. Consumers in vulnerable circumstances, however, may be significantly less able to represent their own interests, and more likely to suffer harm than the average consumer. This is an area where firms can take action and create good outcomes for the customer.

This Occasional Paper aims to:

  • Broaden understanding and stimulate interest and debate around vulnerability.
  • Provide practical help and resources for firms in developing and implementing a vulnerability strategy.
  • Show examples of good practice in the way some firms treat consumers in vulnerable circumstances. It, however, highlights a number of those who have not received fair treatment from their firms.

Examples of good practice in identifying and interacting with vulnerable customers have been collated and presented in a Practitioners’ Pack, which may support firms to understand what they could be doing to generate better outcomes for consumers in vulnerable circumstances.

To reach a broader understanding of the role of vulnerability, the FCA commissioned research amongst consumers in potentially vulnerable circumstances. This was combined with a review of available evidence and literature, engagement with consumer and advice groups, and analysis of information provided by firms.

Authors

Martin Coppack, Yasmin Raza, Simon Sarkar, Kate Scribbins

The authors work in the Consumer and Market Intelligence Department of the Financial Conduct Authority, with the exception of Kate Scribbins who is an independent consultant.

Keywords

A vulnerable consumer is someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.

Behavioural economics can help understand the mistakes consumers make, how firms respond to these mistakes and how this affects competition.

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