Firms must act now and digitise customer vulnerability to deliver targeted support, warns MorganAsh

31 July 2025

Firms planning on providing the FCA’s new targeted support must digitise customer vulnerability processes to both ensure efficiency and comply with Consumer Duty, MorganAsh warns.

Referring to the regulator’s recent consultation paper (CP25/17), support services provider MorganAsh says that firms cannot offer the new form of advice without understanding consumers’ characteristics and circumstances – particularly those who are vulnerable.

While the paper sets out the need to define consumer segments with common characteristics, it also confirms that firms need to consider vulnerable customers in segment design and the provision of targeted support. With the expectation to adhere to current guidance, firms still need to comply with Consumer Duty and understand customers’ characteristics.

The FCA’s latest proposals on targeted support aim to bridge the gap between generic guidance and full financial advice, encouraging firms to provide an affordable and accessible alternative. Since just 9% of UK adults received pensions or investments advice in the past year, the proposal is designed to increase pathways, improve consumer confidence and financial wellbeing – all while supporting the government’s growth agenda.

MorganAsh warns firms will need to digitise their approach to customer vulnerability, not just to ensure that targeted support remains viable and affordable, but to remain compliant with their Consumer Duty obligations.

Andrew Gething, managing director of MorganAsh, said:

“With full financial advice still inaccessible to many, targeted support presents a genuine opportunity to transform the advice landscape. To be clear though, firms must be able to understand customers’ characteristics and circumstances to provide targeted support – and to know when it is appropriate to do so. Customer vulnerability is absolutely no exception to this and is integral to wider compliance with Consumer Duty.

“The data gathered from digital vulnerability management can profile consumers of similar segments to meet the targeted support criteria. If the segments are created too simplistically, without the personal profile data, then firms risk falling foul of vulnerability criteria – and could see targeted support pulled before it really gets going.

“To increase access, targeted support must be cheaper and more scalable than traditional advice. However, we must deliver good outcomes – particularly for vulnerable customers. This requires firms to embrace and prioritise digitisation, since any manual approach to customer vulnerability will increase costs and be inefficient. Fortunately, technology is available to drive efficiencies and streamline this process, giving firms the data they need – so they know who they are dealing with, can segment effectively and build both proper guidance and rules around these customer groups.

“While there may be some still unsure about targeted support, we can all absolutely agree that the advice gap is a challenge we must overcome. Targeted support will hopefully close that gap, but to do so, firms must have a digital, data-driven approach to ensure they are offering the right support to the right people.”

MorganAsh is a specialist in Consumer Duty and customer vulnerability. The firm launched its award-winning MARS platform to help firms understand and monitor vulnerable customers and deliver good outcomes – as required by Consumer Duty. It is in use across financial services and the utilities sector, enabling businesses to adopt a consistent approach to identifying vulnerable characteristics and generate an objective Resilience Rating – much like a credit score.

To find out more about MARS or access a free trial, visit: morganash.com/mars or phone: 0330 159 8162.