The Financial Conduct Authority (FCA) launched a probe into how banks and building societies treat customers who need to register under a power of attorney.
Banking providers were reviewed on how they treat customers affected by bereavement, following concerns about what support families receive.
The FCA noted there were examples where account holders were unable to access funds they needed in a reasonable time, resulting in missed payments for household bills.
Other customers also struggled to get the necessary support during a mental health crisis, which further added to their distress.
The FCA found some cases where staff members were “unclear” on the firm’s process of handling a power of attorney or a customer affected by bereavement, as well as handling enquiries “with a general lack of empathy”. This was due to some circumstances of poor staff training, according to the report.
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As well as pointing out areas of improvement, the report also provided examples of good practices from firms.
It said that overall businesses had “taken steps to refine their approach” in line with Consumer Duty, but this was not universal across the industry.
Meanwhile, the use of artificial intelligence (AI) by some firms was also praised, where technology was used to highlight potential vulnerabilities for the customer based on what they said during conversations with staff on the phone.
The probe follows on from its findings in November, when many life insurance firms were also deemed to be settling claims for customers affected by bereavement too slowly.
It revealed providers took an average of between 53 and 122 days to process a customer’s claim from start to finish.
In the case of both life insurance firms and banking providers, the FCA acknowledged that sometimes the struggle of obtaining evidence from a customer also prolonged the process.
‘All firms should consider where they can make improvements’
Emad Aladhal, director of retail banking at the FCA, 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.”
Jenny Ross, editor of Which? Money, said: “At times of great distress, banks should be doing everything they can to make things as easy as possible for their customers, but our research has repeatedly found that, all too often, those who are bereaved or trying to register power of attorney face a range of obstacles, unnecessarily adding to their suffering.
“It is right that the FCA is working to address these serious deficits in customer service, and it should stand ready to take strong action against any firms found to be falling short of expectations under the Consumer Duty.”
