The FCA has told banks and building societies they need to make “improvements” when it comes to dealing with customers affected by bereavement or registering a power of attorney.

The regulator said that its work on the Consumer Duty had highlighted that staff at some firms were unclear on the actions they needed to take and how quickly.

The FCA said that in some cases of bereavement and powers of attorney being invoked some individuals, or their representatives, were unable to access funds to pay essential bills.

It said there were also examples of customers who struggled to get support during an emergency, such as a mental health crisis, adding to their distress.

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.”

Mr Aladhal said consumers needing to notify their banking provider about a bereavement or a power of attorney, should speak to them about how they can “support you and meet your needs.”

Tim Hogg, director at consumer group Fairer Finance, said: "Losing a loved on can 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."

The regulator has published 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.

Following the introduction of the Consumer Duty in July 2023, firms are required to ensure consumers are at the heart of their business and must act to deliver good outcomes for them.

Last November The FCA called on insurance firms to improve bereavement handling times and share best practice after it found it took up to 122 days to process a claim.

The regulator said that while life insurers provide good service to bereaved customers, they needed to settle claims quicker and improve how they measure customer experience.

Financial Planner Phil Billingham said that platforms can also cause problems when dealing with people experiencing bereavement.

Writing in Financial Planning Today in February, he said: “As a profession – and I’m looking at the platforms in all of this – we are really poor at dealing with families when someone dies.

"Too often the platforms' first action on the death of a client is to shut the adviser out of the loop, just when we are often needed the most. We need to get better at this – and fast.”