Businesses should already have procedures in place to aid victims depending on their unique circumstances, but the rule will bring greater uniformity to the way financial abuse is handled across the industry.
In light of this, we'll talk about why it's critical to commit to this code so that you may deliver even better service to your target audience as a company.
What is the Financial Abuse Code and why was it introduced?
The Code was formed in 2018 to raise awareness and comprehension of financial abuse among businesses and their employees, as well as how to recognise it. It has been updated to reflect the industry's increased awareness of victim-survivor needs, including debt separation therapy.
The new Code is in line with recent legislative and regulatory changes, such as the Financial Conduct Authority's Guidance on the Fair Treatment of Vulnerable Customers and the Domestic Abuse Act 2021, which recognises economic abuse as a type of abuse for the first time.
Twenty-nine UK Finance and Building Societies Association (BSA) members have agreed to follow the revised Code, which covers thirty-nine brands. This comprises fourteen organisations that have made their first commitment to the Code.
The BSA's Head of Legal, Conduct Risk and Compliance, Elaine Morton, said:
“Sadly the almost two years of the pandemic has seen an increase in abuse, including financial abuse. Financial abuse can often continue to devastate lives for years, sometimes well after the ‘in-person’ relationship is over. The updating of this Code is both positive and timely following the regulatory and legal improvements we have seen this year. The BSA is delighted to become a signatory to the updated Code.”
What are the main principles of the Financial Abuse Code?
Six 'high-level Vulnerability Taskforce' principles make up the code of practice. Customers in vulnerable situations will be handled fairly and sensitively, according to the taskforce, which is part of UK Finance.
The following are the key principles:
Raising awareness and promoting transparency
The first principle attempts to promote knowledge of the occurrence and effect of financial abuse inside businesses, including what financial abuse looks like, which groups and demographics are most likely to be impacted, and the major problems victims face based on their financial connections.
An industry-wide consumer education pamphlet will help enhance customer knowledge of the financial services sector's assistance and promote dialogue with their financial providers.
Staff providing victims with guidance and assistance will be expected to show empathy and be eager to learn the skills and information required for their job.
Employees must be trained in areas such as empathy, understanding of a referral procedure to a specialised team, the capacity to recognise the possible indications and consequences of financial abuse, and continual monitoring of customer results, according to the code of practice.
Internal measures should also be in place to assist personnel with their own financial difficulties, as well as to enhance resilience when dealing with clients in similar situations.
Identification of the problem and enforcing proper action
Before documenting any pertinent information concerning the financial abuse, staff must seek the customer's unambiguous agreement. Businesses will respond to victims in a sympathetic manner, including making ideas and thinking about what the next actions should be.
Staff should make every effort to alleviate any hardship and discomfort that a client may experience as a result of the discovery of financial abuse. Businesses should be ready to invoke the Banking Protocol if the misuse necessitates police action.
Assist in regaining financial control
Businesses should be aware that certain employees may choose not to speak in groups. Companies can communicate with a personal representative if they have the required authorisation from the consumer. This might be a family member, a charity, or a victim assistance organisation.
Firms might impose less severe ID requirements when using financial services to help customers. Accepting non-standard documents as verification of name and address when more standard documents are unavailable is one example. Giving victims access to a basic account is another way of assisting them.
Customers who are in debt or are in arrears will be assisted in avoiding future debt, including a review of current agreements, charges, and fees.
Businesses will be able to raise awareness and build a compassionate attitude against financial exploitation by implementing the new voluntary code of practice.
For additional information about our business, accounting, and legal services, please contact us at [email@example.com].