On August 30, 2023, the FCA published a new webpage with information for firms on how to support vulnerable consumers when providing pension transfer advice.
The FCA reminds firms that when consumers seek advice about transferring DB or other pension benefits, they should be alert to potential indicators customers' vulnerability as this may impact their decision making. Firms should create an environment where consumers feel they can disclose their needs and should provide suitable support.
The FCA sets out examples of possible circumstances that DB scheme members could be in, together with warning signs of when they may be more vulnerable to scams or fraud activity. It also highlights how the consumer duty raises the standards it expects of firms and includes new rules for the treatment of customers in vulnerable circumstances.
Firms should assess their approach to vulnerability for pension transfer customers and take the following steps:
- Identify when customers with DB pensions are likely to approach them for advice and design and deliver support to meet their needs.
- Encourage customers requesting a pension transfer or advice to disclose information where they see clear indicators of vulnerability.
- Tailor communications to retail customers, considering the characteristics of retail customers, including those of vulnerability.
- Where firms interact with customers based overseas, they should also consider whether their customers are susceptible to scams or fraud and look for the warning signs above.
In addition, the webpage outlines how firms can mitigate the risk of harm to vulnerable consumers and provides examples of good and poor outcomes in certain situations.
The FCA will continue to monitor how firms are meeting its expectations and take swift action where it sees malpractice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.