The previous week has seen a string of headline-catching announcements, including – the consolidation of the Payment Systems Regulator (PSR) into the Financial Conduct Authority (FCA), a major change of tack on the FCA’s enforcement transparency proposals, and the effective termination of joint regulatory initiatives on diversity and inclusion (D&I). When the noise has subsided, we'll cover these developments in further detail next week.
In the meantime, there's much to report elsewhere. We lead with new guidance from the FCA on supporting vulnerable customers. Here, there are no new requirements for firms, but as the FCA’s recent live webinar made clear, there remains much variability in standards across the industry.
Our second and third items take a parallel path as the FCA looks for firms to improve customer support and specifically access to home ownership; again, aligned to the UK Government's growth agenda and drive to reduce the regulatory burden.
We round up this week with latest news from the PRA on capital requirements and latest quarterly data on whistleblowing.
FCA publishes practical guidance on supporting vulnerable customers
The FCA recently published findings from a review on how firms support vulnerable customers. The review collected data on actions firms have taken, outcomes for customers, and stakeholder views on existing guidance. While progress is evident, the FCA's review revealed common weaknesses in staff training and communication, offering examples of good practices for firms to adopt.
Another publication, 'Delivering for Vulnerable Customers,' outlines FCA expectations for product and service design, customer service, and communication. It emphasises embedding fair treatment of vulnerable customers into firm culture and operations, rather than treating it as a standalone procedure. Both documents underscore the importance of achieving good outcomes for vulnerable customers and provide guidance for firms in meeting Consumer Duty and vulnerability-related expectations.
Additionally, the FCA highlights the need for firms to continuously monitor and improve their practices to ensure they align with the evolving needs of vulnerable customers. This involves setting clear objectives, defining actions, and regularly assessing the effectiveness of their support mechanisms. By doing so, firms can ensure they provide consistent and comprehensive support to all customers, fostering a more inclusive and empathetic approach.
Read more on the review of treatment of customers in vulnerable circumstances
Read more on delivering good outcomes for customers in vulnerable circumstances
Good practice for Consumer Support outcome
The FCA has published its findings from a review of firms’ approaches to complying with the Consumer Duty’s consumer support outcome across the banking, insurance, payments, consumer finance, and investments sectors.
Key areas of good practice include setting clear objectives, defining actions to demonstrate how support channels meet customer needs, monitoring outcomes using appropriate metrics, and continuously reflecting and reforming practices. Firms are encouraged to proactively understand customer needs, tailor support offerings, and ensure accessibility by removing unreasonable barriers. The FCA also highlights the importance of a firm’s culture in successfully delivering this outcome, and the need to align employee objectives, incentives and remuneration accordingly.
The market-wide areas of improvement that the FCA has identified include building and embedding this culture, as well as tailoring the support options available to meet the needs of a particular product or service’s target market and monitoring a sufficiently broad range of customer outcomes metrics. Firms are also reminded to ensure that post-sales support is as strong, effective and easily available as at the point of sale.
Read more on the consumer support outcome
FCA hopes to improve access to home ownership
The FCA is taking steps to improve access to mortgages and support home ownership in the UK. It reminds lenders of existing flexibility within current regulations that can make mortgages more accessible.
Lenders currently test whether borrowers can afford their mortgage at higher interest rates, a potentially restrictive approach. The FCA will soon seek input on improving this process.
In May, the FCA will propose simplifying rules to help consumers switch lenders, shorten mortgage terms, or explore options outside regulated advice. In June, it will host discussions about the future of the mortgage market, considering consumer needs, the UK economy, and regulation's role.
These initiatives are part of the FCA’s ongoing commitment to review regulations supporting home ownership, as outlined in their January letter to the Prime Minister.
Read more on the steps to support home ownership
PRA consults on leverage ratio change
The PRA recently released a consultation paper (CP) proposing adjustments to the threshold for the application of the Leverage Ratio – Capital Requirements and Buffers Part of the PRA Rulebook. The proposal aims to increase the threshold for major UK banks, building societies, and investment firms from £50 billion to £70 billion retail deposits. This is to ensure that the set of firms subject to the requirement reflects the risk appetite behind the UK leverage ratio framework and to preserve the proportionality of the framework.
The CP is relevant to Capital Requirements Regulation (CRR) firms and CRR consolidation entities and involves the PRA's statutory duty to consult when changing rules. The PRA has assessed the costs and benefits of the proposal, with no significant material costs foreseen for firm-level resilience or financial stability.
The consultation is set to close on Thursday 5 June 2025. The PRA invites feedback on proposals set out in the consultation.
Read more on CP2/25
FCA’s whistleblowing quarterly data released
The FCA’s whistleblowing data for Q4 2024 details the handling of reports received between October and December. A total of 292 new reports were submitted, up from 248 in the same period in 2023 but lower than the 322 in Q3 2024. Most reports (134) were submitted through the online reporting form, with email and telephone also being significant channels.
Out of 388 reports closed, 4% led to significant actions, such as enforcement or restrictions on firms, while 46% resulted in actions to mitigate harm, such as firm visits or compliance attestations. Another 40% contributed to harm prevention without immediate action. Reports primarily included allegations around compliance, organisational culture, and consumer detriment, totalling 852 allegations.
The FCA emphasises whistleblower confidentiality with 30% of reports being anonymous. Transparency also remains a priority although legal restrictions limit public disclosures. The review process aims to demonstrate appropriate handling of all submissions.
Read more on the whistleblowing quarterly data 2024 Q4
