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Do car dealers need a policy on selling F&I to vulnerable customers?

The Financial Conduct Authority has conducted a study into the handling of vulnerable consumers by the finance and insurance sectors.

The watchdog is concerned that vulnerability can influence a consumer’s attitudes towards risk-taking and has conducted the study to highlight good practices and problematic experiences.

“One of the biggest challenges for firms was found to be striking a balance between enabling / empowering, and safeguarding / protecting consumers, and the research evidenced that many providers particularly struggle with the former. Furthermore, the research found that problematic firm behaviour can often cause or exacerbate the financial issues experienced by vulnerable consumers,” said the FCA’s report.

Such behaviours include inappropriate and predatory sales behaviours, technological innovations that might exclude certain people, poor front-line interaction and the failure to provide clear and easily understood explanations both verbally and in writing.

Almost half of UK adults have numeracy skills at the level of an 11-year-old, the FCA said, and one in seven has literacy skills at a similar level.

The FCA said further impacts of firm behaviour saw vulnerable consumers being more at risk of being pushed towards inappropriate products and services, or even withdrawing or being forced out of the mainstream personal finance market altogether.

Its key findings include that many financial products, services and systems are currently not designed to respond to inevitable vulnerability, and a a combination of vulnerability and firm behaviour can and does result in negative and detrimental outcomes for consumers.

“Responding to vulnerable consumers’ needs can be a complex and challenging task for firms. In particular, they have to carefully negotiate striking a balance between empowering consumers to be able to make choices and benefit from a range of dif­ferent products and services on the one hand, and protecting vulnerable consumers – for example, against fraud – on the other.

“However, it is crucial that firms reflect on how ‘safeguarding’ and ‘protection’ can become an excuse for not properly engag­ing with vulnerable consumers’ circumstances and needs. Indeed, this represents a regulatory challenge as well – there is a need to ensure that regulation does not stifle firms’ ability to be flexible and prevent them from making their services, systems and processes fit with the needs of real people.”

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