FCA probes banks

The UK’s financial watchdog has launched a probe into banks and building societies over concerns about their handling of customers experiencing bereavement or registering a power of attorney.

The Financial Conduct Authority (FCA) said while some firms had shown commendable practices under the Consumer Duty, others still lacked the clarity, urgency, and flexibility needed to support customers facing distressing circumstances.

In its latest multi-firm review, the regulator identified a mixed picture across retail banking and insurance services. It noted that some staff remained unclear on appropriate steps to take, leading to delays in accessing essential funds and, in some cases, exacerbating hardship during emergencies such as mental health crises.

“Dealing with a bereavement or setting up a power of attorney can often be stressful and emotional,” said Emad Aladhal, director of retail banking at the FCA. “When banks and building societies get it right for their customers they can make a real difference at a difficult time. But when they 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.”

The findings form part of a broader review on how financial services treat vulnerable consumers, following the rollout of the Consumer Duty in July 2023. The duty requires firms to ensure good outcomes for all customers, especially those in challenging circumstances.

Delays in insurance claims

In parallel, a related review into life insurers found that although firms offered supportive services to grieving families, claim settlement times varied significantly. The FCA found average processing times for term insurance claims ranged from 53 to 122 days. For over-50s plans, the average was 20 days, and for whole-of-life policies, 53 days.

Matt Brewis, director of insurance at the FCA, stressed that firms must avoid unnecessary delays. “The loss of a loved one can be intensely stressful and we expect firms to offer the right support to help their customers during this difficult time,” he said.

The FCA has contacted firms involved in the reviews with tailored feedback and has published case studies to illustrate good and poor practice. It confirmed there are no immediate plans to revise its 2021 guidance on supporting vulnerable consumers, which remains in force alongside the Consumer Duty.

The regulator said it will continue to monitor firms’ performance, engage with the industry, and intervene where it does not see sufficient progress.

“Consumers in vulnerable circumstances continue to report poor outcomes,” the FCA stated. “We encourage firms to make use of our examples of good practice and areas for improvement.”

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