Vulnerable customers
It has now been made apparent that although the Fos has, for many years, factored in the vulnerabilities of certain consumers in its decision-making, this will become even more dominant when it exercises its fair and reasonable approach to Covid-19-related cases.
This is particularly important given the likelihood that a far greater proportion of consumers will fall into the FCA's definition of vulnerable customer as a result of the pandemic.
As an example, the Fos is likely to take a particularly sympathetic view on complaints brought by elderly victims of scams and frauds, some of whom may be particularly susceptible to unscrupulous fraudsters in the current climate.
This problem is particularly acute given the advances in technology used by firms and advisers, enabling them to use different platforms to market and access a greater range of products; which, in turn, exposes firms to greater risk of challenge from sophisticated fraudsters.
This is a good reminder to firms to ensure that their vulnerable customer and financial crime prevention policies, among others, are sufficiently adequate to manage these types of vulnerability issues.
Alongside the policies and procedures relating to vulnerability, firms will need to ensure that their general complaints-handling systems are sufficiently robust to handle and resolve Covid-19-related complaints, alongside others.
Approach, risk and forward looking
While the FCA has appeared flexible and pragmatic in its approach so far, it would be a mistake to interpret this as a 'free pass' for firms to take a more relaxed approach around complaints-handling processes.
The current pandemic may see a rise in more complex or contentious cases and so firms' complaints-handling systems will need to be operationally resilient and attuned to the requirements the FCA and Fos outline.
While this may be burdensome, especially under such challenging times, it may help to limit the number of Fos complaints referrals which, depending on number, may trigger case fees, which have recently been increased to £650 per case, as well as mitigate the risk of FCA investigation and enforcement action for non-compliance further down the line.
Firms will also note the Fos's most recent strategy paper which sets out its approach over the next five years; a key part of which is to build on the work it has already done to proactively prevent complaints to stop unfairness coming about in the first place.
In that regard, financial services businesses may also see significant benefits in taking a 'prevention over cure' approach by looking to prevent complaints from occurring, by acting fairly and reasonably in the first instance.
