The Financial Conduct Authority is probing banks on their bereavement and power of attorney policies and its impact on customers.
The regulator’s consumer charter the Consumer Duty, which came into force in 2023, has increased scrutiny for financial services firms including banks.
The FCA said it wants to see banks and building societies improve their processes in the way they deal with customers affected by bereavement or registering a power of attorney.
It said there are instances where some firms’ staff are unclear on the actions they need to take and how quickly.
And this meant, in some cases, individuals and their representatives were unable to access funds to pay essential bills.
The regulator said that there were examples of customers who struggled to get support during an emergency, such as a mental health crisis, adding to their distress.
The FCA added that it has published examples of good and poor practice to help firms provide the right support by being adaptable and putting consumers’ needs at the forefront of everything they do, which is consistent with the Consumer Duty.
This multi-firm review fed into the wider work on how financial services firms are treating vulnerable consumers, but also has specific findings that are relevant for banks and building societies.
The FCA’s director of retail banking, Emad Aladhal, said: “Dealing with a bereavement or setting up a power of attorney can often be stressful and emotional.
“When banks and building societies get it right for their customers they can make a real difference at a difficult time.
“But when they fail to recognise and respond to customers who need more help, it adds to the stress. All firms should consider where they can make improvements.
“Our message to consumers is this – if you need to notify your banking provider about a bereavement or a power of attorney, speak to them about how they can support you and meet your needs.”
Industry leaders have welcomed the FCA’s probe, saying that banks should make the bereavement journeys for customers “as smooth and compassionate as possible”.
Tim Hogg, director at consumer group Fairer Finance said: “Losing a loved one is always traumatic—but for many, it can also be the beginning of a bureaucratic banking nightmare, as relatives are left to close accounts and reconcile the affairs of their loved one.
“These journeys are often too hard and emotionally draining, with repetition, delays, and unnecessary steps.
“This kind of ‘sludge’ has no place in a modern banking system, especially when it hurts some of the most vulnerable consumers.
“Banks should make bereavement journeys as clear, smooth, and compassionate as possible.
“Indeed, the best banks are making these journeys quicker and simpler for grieving families.”
