FCA gearing up to review firms’ treatment of vulnerable customers

The Financial Conduct Authority (FCA) has said it will start the process of reviewing firms’ treatment of vulnerable customers as it set out its plans for the next year.

In its Business Plan for 2024-25, the FCA has set out a programme of work for the final year of its three-year strategy to achieve better outcomes for consumers and markets.

Nikhil Rathi, chief executive of the FCA, said: “We’ve already made significant progress in delivering against the bold vision we set out in our strategy two years ago, including the game-changing introduction of the Consumer Duty and proposing the most far-reaching reforms to wholesale market regulation and the listing regime in decades. 

“We remain resolute in supporting the vital role the financial sector plays in the UK’s long-term economic growth, embracing the potential benefits that technology presents both for us and the firms we regulate, while also continuing to protect consumers and ensure market integrity.”

The FCA will continue to deliver the 13 commitments in its strategy, which focuses on preventing serious harm, setting higher standards and promoting competition.

The regulator said its planned programme of work builds on the progress made over recent years to become a more “outcomes-based, assertive and data-led regulator”. 

The FCA said it is making better use of data to spot and stop harm faster and said it is being tougher on the firms that could cause harm.

It removed over 10,000 potentially misleading adverts in 2023 and sent out 2,243 warnings about unauthorised firms and individuals.

It also more than doubled the number of firm permissions cancelled, compared to the previous year, for failing to meet its minimum standards.

The FCA confirmed earlier this year that it is currently investigating historical arrangements used by motor finance firms to pay commission to car dealers and brokers.

If its concerns are realised, it could rule that there has been "widespread misconduct" in the way brokers and car dealers were paid by motor finance companies without car buyers' explicit knowledge.

The FCA says it is noticing a high number of consumer complaints to motor finance firms concerning historic commission arrangements, which the FCA banned in 2021 when it also reiterated that brokers and dealers should make their customers aware that they earn commission from finance sales.