Payments firms and vulnerable consumers: are you meeting FCA standards?
For payment service providers (PSPs) and electronic money institutions (EMIs), the Consumer Duty (the Duty) requires you to deliver good outcomes for retail customers.
Recent feedback from the Financial Conduct Authority (FCA) on how the payments sector is supporting vulnerable customers brings the Duty into focus, with a clear message that the FCA will intervene where PSPs and EMIs are not meeting the regulator’s expectations.
Why your firm should take notice of the FCA’s feedback
At the heart of the FCA’s review of vulnerable customer arrangements within the payments sector is the fact that ‘around half of UK adults show at least one characteristic of vulnerability’. This highlights the importance of these arrangements to your FCA Consumer Duty obligations.
As well as meeting your regulatory obligations, the success and reputation of your business depend on how you look after your customers – especially those who need more support when things go wrong for them.
Many PSPs and EMIs are driven by a desire to empower customers and remove barriers to accessing payment services. Improving your support for vulnerable customers is strongly in keeping with this.
About the feedback
The FCA set out its findings on what firms are doing well and where firms need to do better across the following core areas:
- Identifying and recording vulnerable consumers
- Supporting customers in vulnerable circumstances
- Consumer understanding and communications
- Governance, management information (MI) and outcomes monitoring
- Overseeing agents and distributors
The feedback also emphasises the appropriate application of proportionality for smaller firms, taking into account factors such as business model, customer base and risk of customer harm.
Whilst smaller firms are still expected to provide effective support for vulnerable customers, this may not necessitate the level of complexity and sophistication of arrangements required by larger firms.
Key messages from the feedback
The FCA’s findings ‘[do] not introduce new requirements or prescribe a particular way to meet [FCA] expectations’.
Even so, the FCA expect all firms to interpret and demonstrably comply with the Consumer Duty to ensure fair treatment and good outcomes for customers in vulnerable circumstances. This means regularly assessing the effectiveness of your vulnerable customer arrangements and taking appropriate action to make improvements where needed.
A blog post accompanying the feedback has noted how ‘relatively simple changes can make a real difference’. The blog also breaks down the expected standard of vulnerable customer arrangements, that firms of all sizes are expected to meet, into five key elements:
- Understanding the vulnerabilities most relevant to the firm’s customers
- Identifying and supporting customers in a consistent way
- Demonstrating the firm’s approach is leading to good outcomes
- Learning and improving when something isn’t working as well as it should
- Board or senior management receiving enough information to understand whether vulnerable customers are receiving good outcomes
These elements represent a helpful starting point for assessing how well you’re supporting your vulnerable customers.
Our view
The more thoroughly you evaluate your systems, processes and controls for looking after vulnerable customers, the better equipped you will be to deliver good outcomes for these customers.
There are some common themes running through the FCA’s feedback, which provide a useful steer on where to focus your attention when making improvements:
- Effective governance with robust oversight and challenge remain a high priority for the FCA, in keeping with the emphasis on ‘governance arrangements and systems and controls’ within the FCA Regulatory Priorities Report for the Payments Sector (March 2026).
- Understanding your own customers’ specific vulnerability characteristics and types is crucial when putting in place arrangements to match their needs.
- Consistency of approach when identifying, recording, sharing and supporting customer vulnerabilities. Policy weaknesses, incomplete data and reliance on staff judgment can all lead to inconsistent outcomes.
- Maintaining and using robust MI to monitor trends in vulnerability characteristics, assess outcomes, achieve continuous improvement and test the effectiveness of those improvements.
- Adaptability of approach to best meet the ongoing and evolving needs of vulnerable customers – designing support methods and communication channels around these needs, recognising when you can do things better and taking action over time.
- Being able to demonstrate that arrangements are effective. Merely having policies, procedures and training materials in place is not enough – can you evidence that they achieve good outcomes for your vulnerable customers?
Whilst the FCA’s observations and findings are based on a review of payments and e-money firms, the Consumer Duty applies across the UK regulated financial services sectors. The FCA’s feedback can also therefore be equally informative for firms operating across the spectrum of regulated financial services firms.
What happens next
There’s no mistaking the FCA’s closing message – ‘Where we find firms are not meeting expectations, we’ll intervene using our full range of supervisory tools’ – making it clear that not taking customer vulnerability seriously will be detrimental to your business.
The FCA may engage with your firm without warning; take this publication as a cue to reassess your Consumer Duty compliance as soon as possible.
How BKL can help
Our regulatory advisory approach is built around the realities of payments and e-money firms and other FCA-regulated financial services businesses.
We can help you move forward with a clearer understanding of your regulatory obligations and how to strengthen your governance, systems and controls. This includes applying the Consumer Duty to your vulnerable customer arrangements.
We focus on your business’s commercial aims and aspirations, enabling you to make proportionate decisions that stand up to scrutiny.
For a chat about how we can help you, get in touch with Ben Arram using the form below.
Contact Ben
Frequently asked questions: delivering good outcomes for vulnerable consumers of payments firms
What do the FCA mean by a “consumer in vulnerable circumstances”?
A consumer in vulnerable circumstances is someone who, because of their personal situation, may be especially susceptible to harm if a firm does not provide appropriate support. The Financial Conduct Authority (FCA) identify four key drivers of vulnerability: health, life events, financial resilience and financial capability. A customer does not need to fit a single profile to be vulnerable, and vulnerability can be temporary, permanent or fluctuating. For financial services firms, understanding which vulnerability characteristics are most common within their customer base is an important part of delivering the good outcomes required under the Consumer Duty.
Do all payments firms need a vulnerable customer framework?
Yes. All FCA-regulated payment firms should have arrangements to identify, support and monitor customers in vulnerable circumstances. The FCA’s latest findings make clear that expectations apply regardless of firm size. Smaller firms may take a more proportionate approach than larger organisations, but they must still be able to demonstrate that vulnerable customers receive good outcomes and that their approach is effective in practice.
How can payments firms identify vulnerable customers more effectively?
The most effective approaches combine staff training, customer disclosures, operational processes and technology. Firms should look for vulnerability indicators throughout the customer journey rather than relying solely on customers to volunteer information. The FCA highlight good practices such as prompting customers to disclose relevant needs, training staff to recognise signs of vulnerability, reviewing customer interactions and complaints, and using systems that help route customers to appropriate support channels.
Is having a vulnerable customer policy enough to satisfy the FCA?
No. A policy alone is not sufficient. The FCA’s review emphasises that firms must be able to demonstrate that their policies, procedures, training and controls are producing good customer outcomes in practice. Firms should be able to evidence how vulnerabilities are identified, how support is delivered, how outcomes are monitored, and what improvements are made when issues are identified. Documentation is an important starting point, with the effectiveness of that documentation being what regulators will then ultimately assess.
What management information (MI) should Boards and senior managers receive?
Boards and senior managers should receive regular MI that helps them understand whether vulnerable customers are receiving good outcomes. This may include data on vulnerability characteristics, customer outcomes, complaints, support measures, service performance trends and remediation actions. The FCA expect senior leaders to provide challenge and oversight rather than relying solely on annual Consumer Duty reporting. Good governance requires ongoing monitoring and continuous improvement.
What happens if the FCA find weaknesses in a firm’s vulnerable customer arrangements?
The FCA has stated that it will use its full range of supervisory tools where firms do not meet expectations. Firms that cannot demonstrate effective arrangements may face increased regulatory scrutiny, remediation requirements or further supervisory intervention. Beyond regulatory consequences, weaknesses in vulnerable customer support can create operational, reputational and customer-outcome risks. The FCA’s message is clear: firms should assess their current approach and take appropriate steps to address any weaknesses now rather than waiting for a regulatory review or investigation.
How does the Consumer Duty apply to vulnerable customers?
The Consumer Duty requires firms to act to deliver good outcomes for retail customers, including those in vulnerable circumstances. Vulnerability should be considered across all Consumer Duty outcomes, including products and services, price and value, consumer understanding, and consumer support. Firms should be able to show that vulnerable customers are not experiencing foreseeable harm and that their needs are reflected in decision-making, communications, service design and customer support arrangements.
Do firms need to monitor third parties, agents and distributors?
Yes. Firms remain responsible for overseeing agents, distributors and other intermediaries involved in delivering products and services. The FCA expect firms to understand how vulnerable customers are treated throughout distribution channels, collect relevant MI, provide training and guidance where necessary, and take prompt action when problems are identified. Consumer Duty responsibilities cannot be delegated away simply because customer interactions are handled by a third party.
Are digital-only payment firms at greater risk of poor vulnerable customer outcomes?
Potentially. The FCA note that digital and transactional business models can increase the risk of harm because customers may have fewer opportunities to speak directly with a person. Firms operating primarily through digital channels should consider whether customers have access to alternative support methods as well as accessible communications and escalation routes when additional assistance is required. Digital innovation and good customer outcomes should work together rather than compete with one another.
How often should payments firms review their vulnerable customer arrangements?
Vulnerable customer arrangements should be reviewed on an ongoing basis, not just as part of an annual compliance exercise. Firms should regularly analyse customer data, complaints, outcomes monitoring, quality assurance findings and emerging vulnerability trends. The FCA’s review highlights the importance of testing whether support measures and any process improvements are effective, learning from issues when they arise, and adapting processes as customer needs and business models evolve. This helps create a demonstrable culture of continuous improvement.
Is vulnerability only about customers experiencing financial difficulty?
No. Financial resilience is only one of the FCA’s four recognised drivers of vulnerability. Customers may also be vulnerable because of physical or mental health conditions, significant life events, limited financial capability or other circumstances that affect their ability to make informed decisions or engage with financial services. Firms that focus solely on financial hardship risk overlooking a significant proportion of vulnerable customers.
How can firms prepare for an FCA review of vulnerable customer outcomes?
A good starting point is to seek external expertise to assess whether the firm can clearly meet the key standards highlighted by the FCA: whether it understands relevant vulnerabilities, identifies and supports customers consistently, can evidence good outcomes, learns from shortcomings, provides meaningful management information to the Board and senior management, and has strong governance arrangements in place. Firms should also review systems and controls, outcomes monitoring, staff training and record-keeping to ensure they can demonstrate compliance if challenged.
