" Most firms are reliant on frontline staff to identify vulnerable customers but this is a big ask because, however highly trained, they are by no means experts in diagnosis."
65% of intermediary firms expect identifying and protecting vulnerable consumers to become an activity formally supervised by the FCA within the next five years.
The research from Just Group found that firms expect the FCA to include dealing with vulnerable customers as a conduct obligation with redress where firms fail to meet the regulator’s standards.
Intermediary firms called for 'more joined up thinking' by government and regulators and more co-operation across different industry sectors.
Just Group said one practical example highlighted is how the industry is dealing with Lasting Power of Attorney and the fact family or carers, when they need to step in to provide support, might have to provide the same document to dozens of different companies who will have different processes and systems for dealing with them.
Stephen Lowe, group communications director at Just Group, said: “The FCA has said up to 50% of consumers could be potentially vulnerable and need extra support.
“The independent research found the typical number identified by firms was around 5% or less, so clearly there is a huge gap between the regulator’s expectations and the firms’ experience.
“In part this reflects the scale of the issue and the diverse range who are potentially vulnerable, encompassing people with mental and physical health issues, low financial capability, those who have experienced divorce or bereavement, or even some groups such as those with an addiction or ex-offenders.
“Adding to the complexity is that vulnerability may be permanent or temporary and customers may not see even themselves as vulnerable or be reluctant to disclose relevant information.
“We found most firms are reliant on frontline staff to identify vulnerable customers but this is a big ask because, however highly trained, they are by no means experts in diagnosis.
“The most obvious vulnerabilities will be picked up but firms are aware there is a vast swathe of less obvious cases that are going un-recorded.
“Our research shows firms would welcome more industry guidance and cross-sector initiatives, driven by government and backed by regulators, to create a single point of contact to notify an LPA is in place.
“In reality, this is the tip of the iceberg and as the population ages there are many complexities around how firms recognise, record, respond and report consumer vulnerability.”