Advisers urged to consider financial impact on disabled clients under Consumer Duty

Under Consumer Duty, financial services firms must understand the financial impact on disabled clients, a consumer vulnerability expert has warned.

A recent report by The Personal Financial Research Centre at the University of Bristol found that three-in-ten disabled households are in serious financial difficulty, compared to just one-in-ten non-disabled households. Furthermore, households are struggling to access essential services and advice – with only 29% satisfied with the quality of advice or information that was available.

The report highlighted that people with conditions such as learning difficulties, mental and physical health conditions, mobility issues, chronic fatigue and memory-related issues are far worse off.

Andrew Gething, managing director of financial services support provider MorganAsh, argues that, under Consumer Duty, firms across all financial services have a responsibility to identify, record and report on these issues.

He said: “The government has received reports like this for a long time – and is looking for the FCA to prevent disabled people from getting worse outcomes. The industry has said for years that this does not apply to them – but, in practice, has no data to back up this view. The FCA therefore now requires all financial services firms to provide evidence that the outcomes of their disabled consumers are – at the least – no worse than those of the resilient. In truth, many people have not picked this up that this is a requirement of Consumer Duty.”

Clause 1.28 of the FG22/5 guidance states: “The Duty also supports existing legal requirements, such as those in the Equalities Act 2010, by requiring firms to monitor whether any group of retail customers is experiencing different outcomes than other customers and take appropriate action where they do”.

To meet this requirement, Andrew argues that firms must, at the least, report annually on how consumer outcomes are different for those with vulnerabilities and protected characteristics compared to the resilient. Under the Equalities Act, protected characteristics include those with progressive conditions such as cancer, HIV or MS – even if they are able to carry out normal day-to-day activities.

Andrew added: “Under Consumer Duty, every firm must understand the consumers’ characteristics and to report on their outcomes at least annually. This is not easy. While the FCA does not explicitly require firms to assess everyone to achieve this, consumer questionnaires will be by far the most cost-effective method, as undertaking ‘some’ post-assessments will be costly and, inevitably, leave considerable gaps in the data.

“Firms should then be able to demonstrate that their disabled consumers fared as well as the resilient. Only then will firms have the evidence to say, ‘this does not apply to us’.”