The Analysis News & Opinions


New guidance plan on vulnerability


Opinion


Business confidence shows two-edged bounce


Our Scottish small business confidence index jumped from -154.8 points in Q1, the lowest ever figure recorded, to -10.1 points in Q2. In the same period, the UK-wide index increased by 138.4 points to -5.0 points. This research suggests there has been some


recovery in business optimism across the UK, though confidence remains on average slightly lower in Scotland. However, expectations of future performance are increasingly polarised, with a quarter (25%) of the 195 Scottish owners surveyed in June for the study expecting their performance to be “much worse” over the coming quarter, whereas one in ten (11%) expect the opposite. After a complete collapse in business con-


The consumer-finance regulator has launched a major new consultation, setting out new best practice guidance for firms to do more to protect vulnerable consumers. The Financial Conduct Authority (FCA)


said that more than 24 million people display one or more potential characteristics of vulnerability – which include physical and mental health issues, recent life events such as bereavement, capability and financial resilience. Over a million people received debt advice last year. The FCA said firms should do more to


ensure that vulnerable consumers are receiving positive outcomes. The consultation incorporates feedback


from a range of bodies including consumer organisations, firms and trade bodies following the first phase of consultation in July 2019. The FCA found many examples of good


practice and firms thinking carefully about their customers and potential vulnerability. However, the FCA is also aware of cases where vulnerability is either not considered by firms or positively exploited for gain. The guidance aims to provide a framework


that allows all firms to accurately assess whether they are treating vulnerable consumers fairly, ensuring consistency across the financial-services sector.


August 2020 Alongside the draft guidance the FCA


has also published research on vulnerable consumers’ experiences of dealing with financial services firms. The research, which includes 21 in-depth


case studies of consumers displaying a range of indicators of vulnerability, highlights four key themes for firms: l Recognising vulnerability and also understanding customers’ needs. l The value of sympathy. l The importance of empowered and knowledgeable staff. lMeeting vulnerable consumers’ communication needs. Christopher Woolard,


fidence in the previous quarter, the fact that confidence is coming back is most welcome. Given that so many small businesses were closed up until very recently, this increased optimism is due in no small part to the coro- navirus support rolled out at speed by the UK and Scottish Governments. Let us be clear: small firms are by no means


out of the woods. These figures tell a tale of two economies – the one is getting back to business and the one with a tougher journey back. A division has opened up between those that have been able to access support or diversify operations and those that have gone four months unable to trade or tap into help. According to the research, the share of


interim chief


executive at the FCA, said: “This guidance sets out what firms should do to ensure vulnerable consumers are being treated fairly. “We know many more customers will be


struggling with their finances as a result of the impact of coronavirus. “Supporting vulnerable consumers is a


key focus for the FCA, and the coronavirus crisis has only highlighted its importance. “While many firms do excellent work to


support their vulnerable customers, we will not hesitate to step in where others do not.” The guidance is open for consultation until 30 September 2020.


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small firms in Scotland that have reduced headcounts over the last three months is at an all-time high (23%), while the proportion of businesses creating jobs is at an all-time low (1.5%). It is great to see signs of recovery – but we


cannot be complacent. While government figures do not yet show a significant surge in unemployment, our statistics suggest that many firms are already making very difficult decisions.


Andrew McRae Scotland policy chair, Federation of Small Businesses


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