On 29 July the Financial Conduct Authority (FCA) published the feedback statement and second iteration of its draft Guidance on the Fair Treatment of Vulnerable Customers (FCA GC20/3).

The draft Guidance provides firms with a practical, flexible framework to help identify vulnerable customers and ensure they receive the best possible support. Rather than setting minimum standards for compliance which could give rise to a 'tick box exercise?, the regulator recognises the diversity in operational models and seeks to encourage holistic cultural change.

This is particularly pertinent right now as the FCA's analysis estimates that the number of customers displaying vulnerability characteristics has increased by 1.5 million since the national lockdown began.

The banking and finance industry's response to the pandemic has already been shaped by the FCA's initial consultation on vulnerable customers. A clear plan has been put in place to help customers whose finances have been impacted by coronavirus.

The scale and breadth of the response has been unprecedented with the industry providing:

• two million mortgage payment deferrals
• more than one million payment deferrals on credit cards
• over 700,000 payment deferrals on personal loans
• over 26 million overdraft buffers applied to primary current accounts
• over £20 billion of facilities to 1.3 million businesses, through government-backed coronavirus lending schemes
• new ways for individuals that are shielding to access cash and pay in a way that suits them
• an additional £14.2 million capital injection into the debt advice sector to enable them to prepare for the anticipated demand for independent advice.

Together these actions address the updated drivers of vulnerability and harms outlined in the draft Guidance.

The pandemic has clearly shown that anyone can become vulnerable at any time, and the regulator has encompassed this into the new ?Spectrum of Risk? concept.  This new approach, combined with a clear statement that frontline colleagues are not expected to diagnose vulnerability, will make it easier for firms to consider vulnerability at a macro and individual level and both have been welcomed by members.

We also support the FCA's decision not to link the Guidance to the Senior Managers Certification Regime as only by making this everyone's responsibility will we collectively deliver the cultural change that this policy is designed to achieve.

There is much to welcome in this Guidance. It is now important that the Final Guidance enables firms to operationalise these new expectations by:

• confirming through a clear statement that the Guidance will not apply retrospectively
• minimising the risk of diverging regulatory expectations, for example expectations of fair treatment of customers through the Vulnerability versus Covid-19 Temporary Guidance
• ensuring that all stakeholders involved in supporting vulnerable customers, including adjudicators, understand the FCA's policy objectives given the subjective nature of outcomes-based regulation.

Firms will always do their utmost to identify vulnerability as per the Guidance, and we encourage customers to engage with their providers on the supports that they might require as the UK moves into the next phase of its response to the pandemic.

We look forward to working with the regulator to build on this as the Guidance is finalised.