The Financial Conduct Authority (FCA) has raised concerns about how some banks and building societies are failing to offer adequate support to customers affected by bereavement or the process of registering a power of attorney. The regulator has found that while some firms have introduced clear policies and procedures to assist vulnerable customers, there are significant areas for improvement in others.
Emad Aladhal, director of retail banking at the FCA, emphasized the emotional and stressful nature of dealing with bereavement or setting up a power of attorney. “When banks and building societies get it right for their customers, they can make a real difference at a difficult time. But when they fail to recognise and respond to customers who need more help, it adds to the stress,” Aladhal said. “All firms should consider where they can make improvements.”
A power of attorney allows a trusted person to make decisions on someone else’s behalf if they become unable to do so themselves, and the FCA’s concerns highlight how important it is for banks to be aware of and responsive to the needs of these vulnerable customers.
The regulator identified several ways that customers’ experiences can be worsened when banks fail to respond appropriately. These include adding to the distress of customers by lacking empathy, making them repeat their situation multiple times, and hindering their access to funds, often at critical moments such as paying bills. In some instances, customers have faced delays or been left with minimal help when they needed it most.
Greg Sachrajda, head of retail banking market interventions at the FCA, noted that while many firms have made positive strides, such as using data to identify customers in vulnerable situations, some customers still faced difficulties accessing essential funds. “We’ve seen banks actively using data to identify customers who are in vulnerable circumstances and improving their processes to meet expectations. However, some consumers still weren’t getting the best experience, especially when it came to accessing funds for essential bills,” Sachrajda said.
A key issue identified by the FCA was the lack of flexibility within some banks’ processes. Firms are often rigid in their procedures, which can be problematic when urgent financial needs arise, such as in cases where someone’s capacity changes suddenly or when money is required for emergency purposes. The regulator suggested that firms need to be more adaptable and responsive in such situations.
Some banks have introduced more flexible solutions, such as setting up dedicated teams to handle bereavement and power of attorney cases. Additionally, some firms have implemented technology like artificial intelligence (AI) to monitor customer interactions, ensuring that staff can recognise signs of vulnerability that may otherwise go unnoticed.
However, the FCA also found that not all firms had sufficient options for attorneys to access the accounts of the individuals they represent. Online and app-based banking services were often unavailable to attorneys, which could delay urgent transactions. The FCA’s report highlighted the need for improvements in communication and support for customers and their representatives, as some staff were found to be unclear on what actions they needed to take.
Another issue was a lack of empathy shown by some staff members when dealing with customers in distress. “In some bereavement and power of attorney cases, staff did not acknowledge that customers were noticeably distressed and upset, which can impact their confidence in dealing with financial services,” the FCA stated.
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The regulator’s report calls for a greater focus on identifying customer vulnerability, with an emphasis on ensuring that staff are properly trained to understand and address the needs of bereaved customers or those registering power of attorney. The FCA’s 2023 Consumer Duty requires firms to provide good outcomes for all customers, including those in vulnerable circumstances. The Duty also stipulates that where someone is authorised to act on behalf of a customer, such as through a power of attorney, the firm must provide the same level of support as they would to the customer themselves.
Fiona Turner, head of vulnerability, financial inclusion, and capability at UK Finance, acknowledged that while progress had been made, there was more work to be done. “Firms take care to identify the needs of their customers and ensure they receive the right support, but we understand that there is more to be done,” Turner said. UK Finance is working with its members and the FCA to improve customer outcomes across the industry.
Consumer group Which? also expressed concern, with editor Jenny Ross stating, “At times of great distress, banks should be doing everything they can to make things as easy as possible for their customers. Our research has repeatedly found that those who are bereaved or trying to register power of attorney face a range of obstacles, unnecessarily adding to their suffering.”
The FCA has written to all the firms reviewed, urging them to address the issues raised and improve their support for vulnerable customers. As part of its ongoing efforts, the regulator plans to follow up with these firms to ensure progress is made.
