Amid all the crucial developments affecting the UK economy, the accounting industry, and businesses brought about by COVID-19, the government has taken upon itself to find relief solutions.
In its recent effort to remedy the pandemic’s adverse effects, the Financial Conduct Authority (FCA) has added to the government’s string of attempts by unveiling a new set of guidelines. The UK financial regulator seeks to ensure that financial service companies and lenders further extend their capabilities to protect vulnerable customers.
As the number of cases continues to rise and more businesses still await reopening opportunities with their employees on standby, many find themselves in dire need of financial loans to get by. Thanks to the watchdog’s efforts, however, the FCA has managed to stay on top of potential opportunism and abuse of power by enforcing best practice guidelines to protect those in need.
The drive behind the latest update
According to the British financial regulator, more than 24 million UK residents display one or more inherent characteristics of vulnerability. Ever since COVID-19 became a widespread pandemic, however, this number has undoubtedly risen as more and more borrowers have displayed physical and mental issues that make them vulnerable.
Given the current rise in borrowers and an indefinite period of difficulty and economic slowdown, the FCA has taken upon itself to ensure that vulnerable consumers receive positive outcomes in borrowing experiences.
How the guidelines seek to impose a fair treatment of customers
Long before COVID-19 took place, the FCA began their consultations to reinforce new policies and guidelines that would ensure fair treatment for customers in July 2019.
Throughout its first phase, the UK financial regulatory body sought to lay out expectations regarding how firms should treat vulnerable customers so that the experience is as fair as possible. Beyond this, however, the second phase incorporated feedback from firms, consumer organisations, and trade bodies to further refine the final set of guidelines in place.
Despite the FCA’s initial findings of good practice and various firms initiating on the need to consider the potential vulnerability of customers, the financial body also discovered that some companies exploited customers for gain. With the guidance in place, however, the entity seeks to further educate firms on how they can accurately assess the fairness of the way they treat customers.
Crucial themes set to take place in the future?
According to the FCA’s research and initial findings, firms must be implored to take note of recurring vital themes that they must consider when handling customers. In its research, the four key themes were highlighted as follow:
- The value of sympathy when addressing borrower-related situations
- The importance of having knowledgeable staff
- The importance of meeting the communication needs of vulnerable consumers
- The ability to recognise vulnerability while understanding the needs of customers
Through the use of these themes, the FCA seeks to clear up what firms must be able to do so that they can ensure treating vulnerable consumers fairly. The need for a stricter set of guidelines has been made even more essential as a result of the impact of COVID-19—which has led to the Financial Conduct Authority lending a keener eye in observing lending firms.
Keeping in mind the growing concerns of consumers regarding the need for more loans to be taken out at various steps to remedy the effects of COVID-19, the FCA has unveiled a set of guidelines that lenders must follow. Through the use of these pieces of advice and strictly set guidelines, a firm can best consider the vulnerability of borrowers for more positive outcomes during the lending experience.
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