Some customers are at greater risk of harm if they aren’t given the right level of care and advice, says Nicola Goldie, Head of National Accounts at Virgin Money.
The 2020 Financial Lives research from the Financial Conduct Authority (FCA) revealed a startling statistic: 27.7 million UK adults have characteristics of vulnerability, such as poor health, negative life events, low financial resilience or low capability.
Being vulnerable doesn’t mean these people will definitely experience harm. It just means they are at greater risk, so the level of care they need might be different to others.
Brokers are uniquely placed to pick up on this if conducting regular reviews with your customers.
Who are vulnerable customers?
The regulator has outlined four main categories of vulnerabilities to look out for in its updated guidance on the fair treatment of vulnerable customers.
Health: Health problems can affect a customer’s mobility, decision-making or the way they communicate. Examples include those with a long-term illness, disability or mental health problem.
Life events: Life-changing events such as redundancy or a bereavement can have an impact on a customer’s ability to make important decisions or have time to manage their money.
Resilience: Some customers have low resilience to withstand financial shocks. Are they struggling to manage debt, for example? Customers without a stable support network might need more guidance when making financial decisions.
Capability: Does your customer have poor literacy, numeracy or digital capability? Or is English their second language? These things could affect their ability to engage with their finances or make decisions.
Identifying indicators
The FCA doesn’t expect you to be able to diagnose vulnerability, but you do need to be able to identify indicators of vulnerability and take the opportunity to open a conversation about what support your customer may need.
Look out for signs that someone’s struggling to hear, digest or respond to information, is vague about their financial circumstances, hesitant about how or when to contact them or uncertain about next steps.
Most importantly, avoid making assumptions about what they can and can’t do or advising them on how to manage their circumstances. Just listen, understand, support and record what you’ve agreed.
What should you do if a customer is vulnerable?
The regulator’s updated guidance for firms on the fair treatment of vulnerable customers goes into detail on how firms can achieve good outcomes:
- Understand the needs of their customer base.
- Make sure staff have the skills to recognise and respond to the needs of vulnerable customers.
- Respond to customer needs throughout product design, customer service and communications.
- Monitor whether they are responding to the needs of customers with characteristics of vulnerability and make improvements where needed.
In larger companies, in practice, this could mean training courses for all staff to help them to support vulnerable customers, or appointing ‘vulnerability champions’ to support frontline staff.
Small brokerages won’t have the resources to do that and aren’t expected to have the same processes in place as lenders. But there are things you can do.
For example, equip staff to spot a vulnerable customer, using training materials created by charities or trade bodies to boost their knowledge.
You could also ask customers how they prefer to communicate, as well as what times of day work best for them and follow up later to see if the support offered was effective.
Virgin Money is passionate about supporting vulnerable customers. For more information, talk to your Business Development Manager.
Date published: 22.04.2022
