Why the FCA is looking at bereavement now

0:00Hello and welcome to the FT Advisor podcast. I'm Amy Austin, News Editor at FT Advisor, and today I will be joined by Kate Tuckley, Head of Department Consumer Investments at the FCA. And today we'll be discussing the regulators' latest report and review into reviewed customers and what good and poor practices may look like in this area. Yeah. So, Kate, let's kick right off. So the FCA is obviously reviewing how advisors, platforms, wealth managers handle these bereaved clients, as I said, looking at the fees they're charged, the services they're being offered and whether, you know, it's good enough.

0:38Why is the FCA doing this now? Like, why is it a good time to look into it? Has it found, you know, that actually firms maybe aren't doing as much as they could be? Yeah. So thank you very much for having me here today. I'm really pleased to be here to talk about our review into bereavement processes, as you said. Obviously, bereavement impacts millions of people across the UK. Our financial live survey from 2024 found that 5 % of UK adults over the previous 12 months had suffered a bereavement. So that's obviously really a large amount of people. And also some research that we commissioned in 2024 showed that less than 50 % of people actually felt they were supported through their bereavement processes with financial services firms.

1:33So that was obviously quite a key indicator for us. The work that we're doing focusing on consumer investments also builds on work that we've done in the banking and the insurance sector, which we did over 2024 and 25. In those reviews, we found elements of good practice, but also lots of things that needed to be improved. So the work that we're doing in consumer investments builds on that. So the other point I would just say though, that we recently issued our consumer investments market priorities report this year. And this work fits very centrally in that set of priorities because it's about building consumer trust in the system.

2:24That's one of our four priorities. The other one is strengthening the UK investment culture. And obviously, if people have trust, then they're more likely to engage with financial services firms and potentially invest themselves. So we see this work sitting really neatly at the centre of that. And obviously it's an area where consumers feel a huge amount of emotional stress, also financial harm and consumer investments in particular. We're interested to see whether there are issues around transfer times, around, you know, there are also potential complexities with tax issues, with investments and ongoing charges as well.

3:10So we're looking at looking at processes from end to end in the platforms wealth and advisor space. And we want to understand how firms are supporting customers at this really pivotal time in their lives. And the other point that I would say is obviously we get a lot of contact through our supervision hub, which is our contact center. And we've also had indication of cases coming through there where, you know, you know, consumers are phoning us up in distress because of the delays, you know, and confusing correspondence. So for all of those reasons, we think it's really important that we do this work and it sits right at the heart of our work on vulnerability.

4:01Yeah. So will it be kind of looking at, you know, from the moment these firms get the call, whether it's like, you know, my husband, my wife, my partner, my sister, my brother, etc. has passed away and I need, you know, access to this money or I'm sorting out the affairs, you know. And is it from that point to the end point where it is, you know, done, dusted, settled? Is that kind of looking at the whole journey? Yeah, we'll be looking at the whole journey. So from end to end, so from notification, as you said, all the way through, you know, the support that people receive, the customer journeys that they have to go on right the way up to settlement and transfers.

4:43Really interested to see how consumers are supported through that. Yeah. And, you know, when you start to look at this, because when can firms expect to have this kind of landing on their desk? Are you looking at it in the next month? So we've already kicked it off. We've already notified the firms from our sample, which, as I said, are across platforms, wealth and advisors. And we'll be running it through the rest of this year. So we'll be gathering information. We will also be engaging with firms, obviously, to follow up, reviewing and analysing the responses, coming to our conclusions. we'll give firms individual feedback on the information they've provided to make sure that they have clear you know recommendations if they need to make improvements or alternatively if we see great practice we want to call that out because that's really important as well and then at the end of our review we will be publishing a report around good and poor practice that we see and that's obviously with the aim of you know showing what good outcomes can look like here really encouraging firms to improve them but also calling out poor practice and making sure that's rectified.

6:01Sure and then whereas you know where you do see this poor practice will you be kind of keeping an eye on that firm and like you know seeing over the next year or whatever like what processes they put in place to kind of improve? Absolutely we will we always follow up that's part of our assertive supervision approach so if we give firms feedback we will often give them a deadline in which we want to see those improvements and you know it's fair to say if we see very poor practice then we won't hesitate to act and take you know even further action so. And how does this kind of interact with the consumer duty because obviously you know you've got your treating customers fairly and stuff like that how does this kind of slot into there?

6:41Absolutely core to this piece of work, the consumer duty is absolutely front and centre of it, I would say. So obviously, the consumer duty is about raising standards, you know, it sets a higher bar for consumer protection. And one of the key things obviously linked to the duty is about ensuring good outcomes for consumers. So that's what we're really going to be looking at through this review. Are firms delivering those good outcomes? Are they clear what a person who is suffering bereavement, what their journey should be? What is the support that should be provided? What do consumers understand when they're in that situation?

7:21Are they being given regular updates? You know, what's the correspondence that they get? Is it clear and, you know, timely? So it's all about that customer support, which is central to the consumer duty and making sure that we look at whether firms are following the outcomes that they get, tracking it, monitoring it, are their senior leadership teams, you know, holding themselves to account for those good outcomes for bereaved customers. So yeah, consumer duty is pivotal. Yeah, because that's the thing, I feel like with, you know, you've got your vulnerable clients, that bereavement is pretty up there for when you're probably at your most vulnerable.

8:03I mean I feel like everyone on this earth has probably gone for a bereavement at some point or will you know in the future it's bound to happen um we at FG advisor we get a lot of our stories you know of slow transfers you know I've lost my husband I'm speaking to their pension provider I can't get this transfer through you know they're not giving me my money um or it's taking you know weeks months sometimes we've had years you know sometimes we've had a very long time And this is when people are at their most vulnerable. What would you say to firms that are kind of like, you know, not handing these transfers quick enough?

8:38Because at a point of bereavement, you know, sometimes you really need that money. You know, you've got to pay for a funeral. You've got to pay your mortgage. You know, you need this money and it's not coming. And it really puts people in an even worse position. So how are you going to kind of look at that? Absolutely agree with you. So transfers and delays with transfers are absolutely a cause of harm in the system here. So we're really, really alive to that. You know, transfers cause both sort of distress and emotional harm, but also actual financial harm because it can be time out of the market.

9:17There can be, you know, people, as you said, beneficiaries of estates who desperately need that money. So it's absolutely critical that firms are getting that right and acting as swiftly as possible in relation to that. We will be looking at that as part of our review. So as I said, we'll be looking at that end-to-end process right up to those transfers. And, you know, for us, transfers is not a technical process. I think that's a really important point to make. So it sits at the heart of how consumers experience financial services. And it's so important that firms get that right. It's not technical.

9:57It's not just administration. It really matters to people. And we want to see improvements. So we're carrying out this work looking at bereavement processes, but alongside it, we're actually doing another piece of work, which is engaging with industry on transfer times specifically, not just for bereaved customers, but across the consumer space. And these pieces of work will dovetail together very closely because we want to see a significant improvement in transfer times, in particular for simpler products like ISAs. We think, you know, that there is a good way to go for firms to make improvements on that.

10:41And so we're going to be working very closely. We're going to be engaging over this period of time coming up to see if we can make that happen. and we really want to move the dial in relation to that. Yeah, because transfers are such a sticky process because, you know, when it takes time for the pension provider to do it, you know, if you're speaking to an advisor, and it may be, you know, when someone's bereaved, they're speaking to their partner's advisor who they maybe didn't have much to do with. The advisor then kind of gets stuck with this bereaved client and, like, how they deal with them because not everyone understands that it's through the process, you know, it's the pension provider that's holding it up, but they're obviously only talking to their advisors.

11:20They're like, well, why is it taking so long? And advisors have that tricky job of kind of being the in-between kind of person. Do you, are you kind of going to be looking at that with this review as well and how that's kind of handled? Yeah, absolutely. As I said, so advisors will be part of this review and absolutely we want to understand how the person that is engaging with the bereaved customer is really setting out clearly what that customer journey to the transfer will be like you know setting expectations you know working to service standards and we think service standards are not just about processes they're really about putting people at the heart of that and yeah so we will be looking at how customers what information they're given what understanding they have about the parts the process and you're absolutely right with transfers it's it's a it's a process that goes across the distribution chain so from advisors through as you said pension providers platforms and all of these parties need to work together to make it happen slickly so yeah we'll be focusing on all the different parts and obviously you know it's not all bad there are there are good firms out there doing good things so what does this you know this good support look like when firms are getting it right you know is it you know talking to people constantly you know weekly updates because sitting around and not hearing from someone when you're kind of in that bereavement process is quite difficult to deal with so what kind of things are you looking for from from firms yeah so um we're very clear that our objective is in these processes that harm is reduced that you You know, we get rid of unnecessary delay, unnecessary friction.

13:08And for us, good would look like a firm taking real ownership of these issues and accountability for them. We would obviously, as you said, these customers are probably at their most vulnerable, some of their most vulnerable. And firms need to be able to identify that and recognize it from the get go. So it's a point about having well-trained staff that can recognize that vulnerability. who can deal with those clients, you know, tapping into empathy and all of those skills that can really support that customer. And then it's about having that clear customer journey. It's about making sure customers are not having to chase, they're not getting repeated letters, confusing letters, you know, all of those pieces of the puzzle that go together to make sure that good customer outcome is there but it's about flexibility tailored communications ownership and as we said it's about people not paperwork yeah and I think you know having gone for a bereavement I think I think one of the most important thing is just telling someone once you know not having to call people up and you know the whole chain telling like five different people within a firm you know that this person's passed away because every time you have to say it you know, you're bringing it up again.

14:25So I feel like, I don't know what you think, but that like the one stop, just tell someone once and it all gets sorted is in an ideal world, what we'd all like to see happen, isn't it? Yeah, no, I absolutely agree with that. And I know there are lots of sort of charitable organisations and trade organisations that are really, you know, aiming for that. We want to work with them. We want to understand how we can support that because you're absolutely right. You know, you don't want to be telling multiple people. You just want it to be very simple and straightforward. And the other point is sometimes, especially with consumer investments firms, you know, the people who are dealing with the estates, they may never have interacted with this type of firm before or understand the product.

15:12So, you know, that adds another layer for them. you know it's not like perhaps in a bank account when most people or a lot of people will have a bank account potentially but with a consumer investment you know only a small amount of people have an investment in this country so for the people dealing with those estates it adds that extra layer of complexity which means that you know firms giving consumers the right support with the right understanding is even more important so absolutely agree with that point around you know making it as one-stop shop as possible yeah and is this where the kind of like jargon comes in because as you said if someone's never dealt with stocks and shares isa or something like that and then has to look at someone else's or a pension that has annuities on top and all of these kind of things and they're like what on earth is this is it about you know the firm explaining in like layman's terms exactly what it is so someone understands on like a base level yeah Absolutely.

16:10As I said, consumer understanding is absolutely critical. So, you know, using plain English, lack of jargon, you know, engaging, offering support, offering contact points, reassuring them and clear information about what that product is and how, you know, the firm will help support the customer with dealing with that product because they may not have one themselves and they may never have dealt with one. And is this, you know, because obviously the FCA is looking into, kind of introduced now, it's targeted support, you know, initiative. Is this an area where it could help, you know, actually, if someone goes to a pension provider who can offer and has permissions to do targeted support and they've never dealt with, you know, an ISR, a pension or anything like that before?

16:57Is this a great, you know, kind of showcase of targeted support where you can go, actually, we can kind of help you here and give you, you know, this level of guidance? I think slightly different because obviously targeted support is about filling that advice gap. So it's about nudging and persuading customers who have similar characteristics to, you know, to potentially put their foot in the water and invest themselves. And we're really hoping that has a real impact across the industry. And there may be bereavement processes that interact with targeted support as it goes through. But I think this for us is core to all of our sort of financial services offerings.

17:41So it's around advice. It's around platform services, wealth management. All of those customers in those sectors will have bereaved customers. So I would say this goes broader than targeted support, as you know, we think is is a really exciting initiative and we're really hoping it kicks off. but I'd say this review gets a bit broader yeah and then you know looking at you kind of your firms I think maybe that staff training could be a massive area here um you know our editor Simony she was on a panel um the other month um looking at an empathy kind of initiative that had launched and I think it was more to do with you know like protection firms insurance firms but a lot of their staff when they were in the room said they'd never had support on how to deal with a bereaved client customer is this kind of you know really important because I feel like dealing with someone who is sitting there you know possibly on the verge of tears not knowing whereabouts they are like it's completely different to dealing with someone who's come in and like knows what they want and you know how to handle things um so do you think that is this something you're going to look at like whether firms are actually training their staff specifically on bereavement yeah absolutely so as i said i think i mentioned earlier i think you know what good looks like here is well-trained staff and it's not just training them on the processes as you say it's about the empathy it's about the handling of a consumer in a very difficult time who may not want to talk who may be very emotional.

19:22And I think, and that's why I think we're looking at this review as being really cool and an actual test of a firm's culture because it goes to how you're empowering your staff and supporting your staff to deal with people in these very difficult times. So we'll be really interested to see how firms do train their staff to handle these cases. And obviously we're moving into a world of AI and tech and, you know, having this help firms and staff, do you think that maybe AI is an area that can help with like vulnerability and bereavement? Like not necessarily speaking to a robot, you know, when you've just been bereaved, not that far.

20:04That's a bit, you know, on the other end. But I mean, you know, not everyone is quite so vocal with their bereavement or their vulnerabilities. You know, they might just phone up and say, hey, I need help with this rather than this has just happened to me. And do you think that AI can maybe pick up vulnerable clients and maybe point them to the right staff that they need to talk to? I think absolutely that is a possibility. You know, I think innovation like that can actually be very, very good and very supportive in that way. But obviously, really important that firms know how they're using that, that they test it.

20:42because as you know we've just talked about I do think bereavement is an area where actually people you know putting a face to a name is actually really important so absolutely we'd be interested to see if AI is being used in this space and how it's being used but making sure it's got those guardrails that it's been tested and making sure outcomes are being tracked um you know it's cool it's absolutely cool but there could well be a place I think for AI and tech in in these processes but I think you know on the other hand I would say that often the majority of people may well want to speak to um to a person as well so it's probably a place for both and what about kind of you know because unfortunately with bereavement vulnerability comes scams you know are you looking at this and like how you know these people who are maybe at their lowest aren't actually going to get targeted by these scammers you know when they're maybe desperate to get you know money yeah I mean I think that's um obviously really important as well and and I think that goes to how a firm you know is identifying these customers how it is giving them information about being wary about scams, about not handing over their information to people without, you know, real caution and always checking our firm checker, which is really important and making sure whichever firm they deal with, they check on our firm checker to see that it's authorized and that it has the right permissions.

22:25That's a really important first step. but yeah we would expect firms to be you know making it clear to consumers that they need to be careful when engaging with other third parties in this space as well yeah and just to kind of round up and finish um you know advisors do say that yes they contact them a lot but why would you say that if they are contacted by you in regards to this why is it important that they actually do share this information with you um and kind of what are your next steps when can we expect to see this coming out? So I would say to firms, please, you know, engage, collaborate with us.

23:02This is about not only supporting consumers, but it's about supporting firms to get it right. And in our view, if firms get these processes right, it shows their culture is right, which will mean hopefully they deliver better outcomes. And that's good for their growth. So it's about sustainable growth for them, you know, learning from the feedback we give them, improving their practices, holding themselves to account to make sure consumers get the right outcome. But then obviously, it's absolutely core for consumers and it goes right to the heart of our work on vulnerability. So that's pivotal, really, for this piece of work.

23:41And in terms of timing, we'll take the rest of this year, obviously, to gather information, to speak to firms. We're going to be engaging with lots of third parties. So our consumer panel, trade bodies, charities, we've had a lot of interest in it, actually, this review. So we're really, really keen to hear from people in relation to it and see how we can support as the regulator getting this right. At the end of the year, I would say we will come out with our good and poor practice and our publication in regards to this. And I mean, anything that makes life easier for bereaved customers is, you know, it's always going to be a positive, isn't it?

24:24So, yeah, thank you, Kate. Thank you for coming in today. It's been lovely to have you here. And for everyone else, tune in next week where we will have other goings on in the industry. Thank you.

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