Vulnerable Customers: Why banks need to get it right
Customer vulnerability is no longer viewed as a niche issue affecting a small group of consumers. Regulators increasingly expect banks to identify, support, and deliver fair outcomes for customers whose circumstances may place them at greater risk of financial harm.
Customer vulnerability has become an increasingly important issue for banks around the world. Economic pressures, aging populations, greater reliance on digital banking, increasingly sophisticated scams, and changes in personal circumstances mean that a significant proportion of customers may, at some point in their lives, require additional support.
Vulnerability can arise for many reasons. A customer may be experiencing financial hardship, serious illness, bereavement, disability, job loss, domestic abuse, or declining cognitive capability. Others may face difficulties because of limited financial or digital literacy, language barriers, low financial resilience, or difficulty accessing digital financial services.
Importantly, vulnerability is not necessarily permanent. A financially confident and capable customer can become vulnerable very quickly following an unexpected life event such as illness, redundancy, bereavement, or relationship breakdown. Conversely, someone experiencing vulnerability today may no longer require additional support in the future.
Banks therefore need to think of vulnerability not as a fixed customer category, but as a set of circumstances that can increase an individual’s susceptibility to financial harm.
This approach is increasingly reflected in international standards and national regulatory frameworks. The G20/OECD High-Level Principles on Financial Consumer Protection call for particular attention to consumers experiencing vulnerability. More recently, the OECD has emphasized that vulnerability can arise from personal characteristics, life events, financial circumstances, systemic barriers, and the way financial products and markets themselves operate.
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Bank regulators zoom in on vulnerable customers
A growing number of national regulators have translated these principles into more specific requirements.
In the UK, the FCA’s Consumer Duty requires financial firms to act to deliver good outcomes for retail customers, including customers in vulnerable circumstances. Firms are expected to understand the nature and scale of vulnerability in their customer base, identify, and respond to customers’ needs, design appropriate support, and monitor whether vulnerable customers are receiving outcomes comparable with those of other customers.
Similar developments can be seen elsewhere.
In Malaysia, Bank Negara Malaysia’s revised Fair Treatment of Financial Consumers policy introduced explicit requirements concerning vulnerable consumers. These include responsibilities for boards and senior management and an expectation that financial institutions provide appropriate support and achieve fair and equitable outcomes for vulnerable customers.
In the UAE, mandatory Consumer Protection Standards require financial institutions to provide vulnerable consumers with appropriate access to financial services, communicate information in suitable formats and ensure that products, services, premises, and processes are accessible to different vulnerable groups.
Other jurisdictions, including Australia, France, Singapore, Saudi Arabia and New Zealand, address vulnerability through combinations of fair-treatment requirements, hardship protections, accessibility provisions, and broader financial-consumer-protection regimes.
Bank obligations to vulnerable customers
For banks, these developments create several practical obligations.
First, employees and systems need to be capable of identifying circumstances that may indicate that a customer requires additional support. Customers will not always explicitly describe themselves as vulnerable or ask for help. Research published by the UK’s Financial Conduct Authority in 2025 found that only 42% of customers in vulnerable circumstances had disclosed their circumstances to their financial-services provider.
Indicators that additional support may be required can include repeated missed payments, unusual account activity, difficulty understanding communications, repeated failed attempts to complete a process, sudden changes in financial behavior or information disclosed during conversations with employees.
However, identification needs to be handled carefully. Information about health, disability, domestic abuse, or other personal circumstances can be highly sensitive. Banks need clear policies governing what information should be collected, why it is needed, how it is recorded, who can access it, and how long it should be retained. The objective should not be to label customers unnecessarily. It should be to understand whether a customer has particular needs that affect how the bank should interact with them.
Second, support needs to reflect individual circumstances. There is no single category of “vulnerable customer”, and therefore there can be no single appropriate response.
A customer with hearing difficulties may need a different communication channel. Someone with poor eyesight may require information in a different format. A borrower experiencing temporary financial hardship may need an affordable and sustainable repayment arrangement rather than a standard collections response. The central principle is flexibility: banks need sufficiently adaptable processes to respond to individual circumstances while maintaining appropriate controls.
Third, banks need to ensure that their products, processes, and technology do not inadvertently create or amplify vulnerability. Digital banking can greatly improve convenience and accessibility, but digital-only processes can create barriers for customers who have limited digital skills, certain disabilities, or restricted access to technology. Automated decision-making can improve speed and consistency, but rigid workflows may fail to accommodate exceptional circumstances. Identity-verification procedures designed to prevent fraud can themselves prevent legitimate customers from accessing essential banking services if alternative methods are not available.
The issue therefore extends beyond frontline customer service. Vulnerability needs to be considered during product design, development, testing, and review.
Finally, banks need to monitor outcomes rather than merely demonstrate that procedures exist. This outcomes-based approach is increasingly reflected in regulatory supervision and enforcement.
Intuition Know-How has a number of tutorials relevant to the content of this article:
- Regulation – An Introduction
- Banking Regulation – An Introduction
- Markets Regulation – An Introduction
- Financial Authorities (UK) – PRA & FCA
