In the advent of the Consumer Duty, financial services firms must demonstrate that they understand the financial impact of disability, a consumer vulnerability expert has warned.

Recent research by the Personal Financial Research Centre at the University of Bristol revealed that 30% of disabled households are in serious financial difficulty. This compares with just 10% of non-disabled households.

The report also found households are struggling to access essential services and advice – with only 29% satisfied with the quality of advice or information that was available.

It highlighted that people with conditions such as learning difficulties, mental and physical health conditions, mobility issues, chronic fatigue and memory-related issues are far worse off.

MorganAsh managing director Andrew Gething insisted that, under the Consumer Duty, firms across all financial services have a responsibility to identify, record and report on these issues.

He said: “The government has received reports like this for a long time – and is looking for the FCA to prevent disabled people from getting worse outcomes. The industry has said for years that this does not apply to them but, in practice, has no data to back up this view.

“The FCA therefore now requires all financial services firms to provide evidence that the outcomes of their disabled consumers are, at the least, no worse than those of the resilient. In truth, many people have not picked this up that this is a requirement of Consumer Duty.”

Clause 1.28 of the FG22/5 guidance states: “The Duty supports existing legal requirements, such as those in the Equalities Act 2010, by requiring firms to monitor whether any group of retail customers is experiencing different outcomes than other customers and take appropriate action where they do.”

To meet this requirement, Gething argued that firms must, as a minimum, report annually on how consumer outcomes are different for those with vulnerabilities and protected characteristics compared to the resilient.

Under the Equalities Act, protected characteristics include those with progressive conditions such as cancer, HIV or MS – even if they are able to carry out normal day-to-day activities.

Gething added: “Under Consumer Duty, every firm must understand the consumers’ characteristics and to report on their outcomes at least annually. This is not easy.

“While the FCA does not explicitly require firms to assess everyone to achieve this, consumer questionnaires will be by far the most cost-effective method, as undertaking ‘some’ post-assessments will be costly and, inevitably, leave considerable gaps in the data.

“Firms should then be able to demonstrate that their disabled consumers fared as well as the resilient. Only then will firms have the evidence to say: ‘This does not apply to us’.”

MorganAsh launched a tool in April last year which enables firms to assess, manage and report on vulnerable consumers, in line with the Consumer Duty requirements.

Within the MorganAsh Resilience System (MARS), firms have the option to collect ‘protected characteristics’ data directly from the consumer as an integral part of the vulnerability assessment.

The system provides automated reports on these characteristics, and the treatments recommended, automating this analysis in compliance with Consumer Duty, UK GDPR and the Equalities Act.

The system is used across financial services and the utilities sector.