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The Financial Conduct Authority has said that banks and buildings societies should do more to help customers in vulnerable circumstances, such as those affected by bereavement or registering a power of attorney.
The financial regulator said that moves made by banks such as resolving cases quickly and breaking from normal procedure when needed were welcome, but that elsewhere, some staff had failed to recognise when customers were exhibiting noticeable distress or upset, potentially causing further harm.
“In some cases, this meant some individuals and their representatives were unable to access funds to pay essential bills,” the FCA said in a statement. “There were examples of customers who struggled to get support during an emergency, such as a mental health crisis, adding to their distress.”
The FCA’s findings come from a review into how financial institutions approach the treatment of customers in vulnerable situations, published on Friday night.
The regulator had previously issued guidance to help financial services firms support such customers in 2021 and introduced the Consumer Duty in 2023, which requires firms to deliver good outcomes for all customers, including those affected by bereavement.
Jenny Ross, editor of Which? Money, said that “at times of great distress,” banks should be doing everything they could to make things as easy as possible for their customers.
However Ross said that Which? research had “repeatedly found that all too often those who are bereaved or trying to register power of attorney face a range of obstacles, unnecessarily adding to their suffering.”
“It is right that the FCA is working to address these serious deficits in customer service, and it should stand ready to take strong action against any firms found to be falling short of expectations under the Consumer Duty,” she added.
The FT previously covered the issue of “Sadmin”: a term used to describe those dealing with the administrative burden following the passing of a relative.
Tremayne Carew Pole, co-founder of Life Ledger, which helps families deal with administrative tasks after death, said that many banks had good intentions, but simply “fell short of the mark” when dealing with bereaved customers.
“After a death is one of the times where people struggle the most. [By improving services] banks could create a truly memorable moment [in a difficult time],” he said.
Matthew Whittley, senior policy manager with Marie Curie, the end-of-life-care charity, said the admin processes followed by many companies following the death of a customer “just aren’t up to scratch”.
The UK Commission on Bereavement found that around 60 per cent of people who are involved in death administration experience practical and administrative difficulties, which equates to 680,000 people across the UK every year.
“The last thing anyone needs when they are grieving is to have to deal with a process that is complicated, hard to navigate and sometimes even entirely unnecessary,” said Whittley.
Emad Aladhal, Director of Retail Banking at the FCA said that when banks and building societies got it right for their customers “they could make a real difference at a difficult time.”
“When [banks] fail to recognise and respond to customers who need more help, it adds to the stress. All firms should consider where they can make improvements,” he added.
“Our message to consumers is this — if you need to notify your banking provider about a bereavement or a power of attorney, speak to them about how they can support you and meet your needs,” Aladhal said.
The FCA said it had written to individual firms to provide specific feedback on how they could improve processes.
