Improving Affordability Checks to Protect Vulnerable Customers

The fair treatment of vulnerable customers has been on regulatory radars for years, but since Consumer Duty regulations came into place, expectations have become much clearer. Guidance published by the Financial Conduct Authority (FCA) in 2021 underscored that recognising and supporting vulnerability isn’t a one-off exercise — it’s something firms must build into their everyday functions.

For lenders, this is about more than compliance. Getting it wrong can cause real harm to their customers and create serious regulatory and reputational risks for the business. It is important for firms to know how to identify and better serve vulnerable customers.

What Vulnerability Means

The FCA defines a vulnerable customer as:

“someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care.”

That means firms need to understand who their customers are and what might put them at risk. The FCA has highlighted four main drivers of vulnerability:

• Health – long-term illness, disability, addiction, or mental health conditions.
• Life events – bereavement, redundancy, relationship breakdown, caring responsibilities, or domestic abuse.
• Resilience – low savings, over-indebtedness, erratic income, or low emotional resilience.
• Capability – limited financial knowledge, poor digital skills, or lack of access to support.

It’s worth remembering that vulnerability sits on a spectrum. For some, it may only be temporary, such as losing a job; for others, it may be long-term or a combination of several factors.

Firms Still Struggle to Get It Right

Even with progress in the sector, many customers still report facing difficulties when dealing with financial services, especially if they have more than one vulnerability.

The FCA’s review published in March 2025 found that many firms could not show how they had built the needs of vulnerable customers into product and service design. In other words, too much was being done after problems had already started.

Traditional approaches rely on self-disclosure, manual affordability checks, or arrears monitoring. The trouble is, these methods are inconsistent, slow, and often pick things up too late.

This shows how important it is to have ongoing, comprehensive assessments built into processes.

Open Banking in Action

This is where Open Banking changes the game. By providing a real-time view of customer finances, it allows lenders to understand resilience and affordability far more accurately.

LendingMetrics’ OpenBankVision (OBV) takes 90 days of fully categorised bank statement data from 99% of UK banks and turns it into a clear picture of a customer’s financial position.

This means lenders can:

• Confirm income with confidence.
• Spot red flags such as gambling spend or reliance on high-cost credit.
• Identify resilience challenges through patterns of spending and saving.
• Make faster, more consistent decisions while staying aligned with Consumer Duty.

The results speak for themselves. For example, Buyline used OBV to improve their affordability checks and enhance customer outcomes. Read the case study here.

Balancing Compliance and Compassion

Financial vulnerability is common across society, and every lender will encounter it. The question is how well they can recognise and respond to it.