Almost half of the UK's working population are financially vulnerable according to the UK's regulatory body The Financial Conduct Authority.
The FCA has announced that it would like to see more action taken from financial services firms to protect individuals that display one or more potential characteristics of vulnerability - which include physical and mental health issues, recent life events such as bereavement, capability and financial resilience.
Over a million people received debt advice last year and point that the FCA says firms need do more to ensure that vulnerable consumers are receiving positive outcomes.
While many firms do excellent work to support their vulnerable customers, we will not hesitate to step in where others do not," Christopher Woolard, interim CEO, FCA
The FCA said that it found many examples of good practice and firms thinking carefully about their customers and potential vulnerability. However, the FCA is also aware of cases where vulnerability is either not considered by firms or positively exploited for gain.
The new guidance aims to provide a framework that allows all firms to accurately assess whether they are treating vulnerable consumers fairly, ensuring consistency across the financial services sector.
Alongside the draft guidance - which is is open for consultation until 30 September - the FCA has also published research on vulnerable consumers' experiences of dealing with financial services firms.
Christopher Woolard, pictured left, interim chief executive at the FCA, said: "We know many more customers will be struggling with their finances as a result of the impact of coronavirus.
Supporting vulnerable consumers is a key focus for the FCA, and the coronavirus crisis has only highlighted its importance.
"While many firms do excellent work to support their vulnerable customers, we will not hesitate to step in where others do not."
Jane Goodland, corporate affairs director at Quilter, said: "The FCA's Financial Lives survey presents, yet again, astounding figures, revealing that 46% of UK adults display a characteristic that could make them vulnerable. And this is before the impacts of covid-19 are felt.
"These sobering figures focus the mind, particularly when we see some groups are hit more than others such as those who rent, are unemployed or are over 75.
"The pressure is on for companies, government and charities to tackle this financial vulnerability. A huge challenge when it comes to customer vulnerability is recognition.
It may be that the client or customer doesn't recognise themselves as vulnerable or even omits facts that might help them be identified as such. It becomes even harder in a digitised age when people may set up a bank account, pension, ISA etc and go years without speaking to anyone from their financial institution.
"There needs to be a focus on how we evolve our systems and employee training so they are attuned to even the slightest hint at vulnerability.
Stephen Lowe, group communications director at Just Group, said said that he is pleased to see the regulator is pushing on with its vulnerability agenda and providing more detail about how it expects firms to meet their obligations.
"The coronavirus pandemic has brought many of the vulnerability issues the FCA is trying to tackle into sharp focus - health problems, bereavement, job loss, financial stress - and is a reminder how quickly people's circumstances can change due to events outside their control," he said.
"We know that most firms have embraced the vulnerability issue and are taking steps in the right direction, but some are more advanced than others."