Global: Banks Urged to Upgrade IT Systems to Meet New Customer Vulnerability Standards

Financial services firms are being advised to urgently overhaul their IT systems and internal processes to meet rising expectations on customer vulnerability, following the release of new independent guidance now recognised by the Financial Ombudsman Service (FOS).

The guidance, published by the Chartered Insurance Institute (CII) and the Personal Finance Society (PFS), aims to close persistent knowledge gaps and provide firms with a practical framework for supporting vulnerable customers. A key focus is the development of robust systems, processes, and data architecture capable of identifying, recording, monitoring, and reporting both customer vulnerabilities and consumer outcomes.

The new standards reinforce the Financial Conduct Authority’s shift from prescriptive rules to a “principles with proof” regime under Consumer Duty—requiring firms not only to act fairly but to evidence that fair outcomes are consistently delivered.

Andrew Gething, Managing Director of vulnerability specialists MorganAsh, warns that firms failing to align their systems with the new benchmark will struggle to demonstrate compliance or defend complaints.

“This higher benchmark effectively becomes the default standard for the FOS,” he said.

Firms must scrutinise their systems and ensure they meet expectations—and act quickly if they don’t. If a firm cannot evidence how it identifies and supports vulnerable customers, it won’t just fall short of best practice; it will fall below what regulators and the Ombudsman expect. That is an extremely difficult position to defend during an active complaint.