Banks urged to review IT systems to meet new customer vulnerability standard

Editorial

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The new guide released by the Chartered Insurance Institute (CII) and Personal Finance Society (PFS) is designed to plug existing knowledge gaps and to give all financial services firms a practical action plan to address the challenges in providing support to veulnerable customers.

In particular, the guide focuses on the necessary IT systems, processes and data infrastructure required by firms to identify, record, monitor and report on both customer vulnerabilities and consumer outcomes.

The guidance builds on the FCA’s move from prescription to ‘principles with proof’, requiring firms to evidence better outcomes and wider compliance with Consumer Duty.

Andrew Gething, managing director of vulnerability specialists MorganAsh, argues that firms that are unable to align their systems with this higher benchmark will find it increasingly difficult to defend complaints and demonstrate regulatory compliance.

“This higher benchmark now becomes the de facto standard for the FOS and means that firms must interrogate their current IT systems and processes to ensure they cut the mustard and take action if they don’t,” he says.”If a firm’s approach cannot demonstrate how they identify and support vulnerable customers – with suitable evidence – they won’t just be out of touch with best practice, they will be out of line with what regulators and the Ombudsman will expect. That’s a hard place to defend from in the case of an active complaint.”