16Dec

Ensuring fair treatment of vulnerable customers should be a priority for authorised firms in all sectors. Firms need to have documented procedures explaining how they identify a vulnerable customer, and what safeguards they have in place when dealing with such customers.

A customer with mental health or mental capacity issues should certainly be treated as being vulnerable. Firms would therefore do well to read the December 2016 issue of Ombudsman News, which gives examples of how the Financial Ombudsman Service (FOS) has dealt with complaints regarding this issue.

The cases summarised in Ombudsman News include:

• A bank who were forced to write off a man’s outstanding debt, after they failed to query information he supplied during the application process. The fact that he didn’t need to pay council tax, and that his driving licence had expired after only being renewed for a one-year period were actually both indicators of his schizophrenia
• A mortgage lender was ordered by the FOS to pay £1,000 in compensation after the firm continued to contact a woman by phone to discuss her arrears situation. It did this even though it should have been aware that telephone contact of this type would exacerbate her severe depression and anxiety
• A bank had to pay £250 in compensation after sending a number of aggressively worded debt collection letters to a woman with serious mental health issues. The FOS judged that the firm had not made sufficient attempts to engage with the woman’s son, who was willing to act as an intermediary on this issue
• A lender was forced to write off a man’s loan after they offered him a second loan only a short time after he had told them over the phone he did not wish to enter into additional borrowing. The lender failed to recognise that the man’s mother had been forced to pay off his first loan, which should have alerted them to the fact he might have difficulties in repaying a further loan. The man was suffering from a gambling addiction and other mental health issues at the time

The publication also gives examples of cases where the FOS decided that a firm’s actions had been sufficient, including:

• A bank who froze the overdraft interest and charges on the account of a woman suffering from depression as soon as she informed them of her issues. The FOS rejected her complaint that the bank should have done more to help
• A short-term high-interest lender who agreed to write off the outstanding loan when it became aware of a man’s mental health issues. His complaint also asked the firm to refund repayments he had already made, but the FOS sided with the firm on this, recognising that the firm had received no indication at the time of the application that he had any issues of this nature

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.