With the Financial Conduct Authority (FCA) seemingly mentioning customer vulnerability more frequently than ever, the Vulnerability Registration Service (VRS) is encouraging credit firms to sign up to its Register. Once they have access to the Register, they will be able to see if a particular individual has joined the Register and has said either:

  • They don’t want to take out any more credit and all applications in their name should be refused. For example, a gambling addict might know that – regardless of the purpose of borrowing stated in any application to a lender – they will be unable to stop themselves spending any loan monies on further gambling
  • They want any firm to which they might apply to conduct more thorough checks before approving an application. For example, the firm might decide to speak to all applicants with a vulnerability before approving their application manually, even if the firm’s normal procedure is to make lending decisions electronically

Anyone who holds power of attorney for someone else can also ask for that person to go on the Register.

After an individual has joined the Register, their details will remain there for at least three months. At any time after the end of that period, consumers can ask to be removed from the Register if they feel they are no longer vulnerable. Once a person has removed themselves from the Register, there will be no way that anyone else can find out that they were ever listed.

The VRS says that the only information held on the Register is name, date of birth and basic contact details, and hopes that this will allay the concerns of any individual or firm who thinks there may be data protection issues here. The VRS does not indicate why a listed consumer may be vulnerable and the Service does not attempt to judge whether individuals who sign up really are vulnerable.

Firms may decide to check the Register at other stages of the loan life cycle, and not just use it at application stage. The fact a customer is vulnerable might, for example, have an impact on how the firm deals with borrowers who request payment arrangements to be set up; or how the firm collects unpaid debts from that person.

The VRS says of its service:

“Consumers in vulnerable circumstances may be significantly less able to represent their own interests, and more likely to suffer harm than the average consumer. Vulnerability is characterised by a range of emotional and practical consequences, including a lack of perspective, poor decision-making, an inability to plan ahead and foresee problems, and changing attitudes towards risk-taking.”

Firms should note, however, that signing up to the Register does not replace their obligation under FCA rules to identify vulnerable customers – there will still be a great many customers with serious vulnerabilities who are not on the Register. Instead, the Register can be used to complement the comprehensive vulnerable customer procedure manuals that firms should already have produced.

One of the UK’s largest payday lenders is amongst the firms who have embraced the Register service. Firms who sign up need to pay a membership fee and an additional fee for each search.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article