The Financial Conduct Authority has warned some vulnerable customers are being "exploited for gain" as it promised action against firms falling foul of the regulator's expectations.
The regulator published draft guidance for firms this morning as part of its ongoing consultation on the fair treatment of vulnerable customers, after the work was initially delayed earlier this year in light of the coronavirus pandemic.
As part of its update the FCA said it had found "many examples of good practice" in the industry, with firms "thinking carefully about their customers and potential vulnerability".
But the regulator also warned it was aware of cases where vulnerability was either "not considered by firms or positively exploited for gain".
Christopher Woolard, interim chief executive at the FCA, said many more consumers would now be struggling with their finances as a result of the impact of pandemic.
He added: "Today’s guidance sets out what firms should do to ensure vulnerable consumers are being treated fairly.
"Supporting vulnerable consumers is a key focus for the FCA, and the coronavirus crisis has only highlighted its importance.
"While many firms do excellent work to support their vulnerable customers, we will not hesitate to step in where others do not."
The warning is the latest in a string of promises from the FCA that it would take action against firms which did not treat vulnerable customers fairly.
Stephen Lowe, group communications director at Just Group, said: "We are pleased to see the regulator is pushing on with its vulnerability agenda and providing more detail about how it expects firms to meet their obligations.
"The coronavirus pandemic has brought many of the vulnerability issues the FCA is trying to tackle into sharp focus – health problems, bereavement, job loss, financial stress – and is a reminder how quickly people's circumstances can change due to events outside their control."
Mr Lowe said most firms had "embraced the vulnerability issue" and were taking steps in the right direction, but some were more advanced than others.
Jane Goodland, corporate affairs director at Quilter, said in the wake of the coronavirus pandemic the "pressure was on" for companies, the government and charities to tackle financial vulnerability.
Ms Goodland said: "A huge challenge when it comes to customer vulnerability is recognition. It may be that the client or customer doesn’t recognise themselves as vulnerable or even omits facts that might help them be identified as such.
"It becomes even harder in a digitised age when people may set up a bank account, pension, ISA etc and go years without speaking to anyone from their financial institution.
"There needs to be a focus on how we evolve our systems and employee training so they are attuned to even the slightest hint at vulnerability."
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