Dealing with vulnerable consumers effectively
The number of vulnerable consumers has grown exponentially since the Covid-19 crisis hit the UK and therefore the businesses that are potentially going to be supporting these consumers need to appreciate this and act accordingly.
Our recent webinar on “Dealing with vulnerable consumers effectively”, provided an insight into the challenges around supporting vulnerable consumers through the Covid-19 pandemic and beyond, how frontline staff can identify and help vulnerable consumers, and some practical advice on how this can be achieved.
Financial Conduct Authority Consumer Research
The FCA found a number of key areas of concern in its research that service providers need to be aware of, so they are able to fully understand the issues around vulnerability:
- Financial services, products and systems often ‘streamline’ consumers (one size does not fit all).
- The response of frontline staff is crucial; if frontline staff don’t deal with the situation appropriately, access to a good outcome may be missed.
- Staff on the frontline do not need to be experts, but they need sufficient training to facilitate a proper conversation, to know where internal expertise lies, and know how and when to refer on.
- Most problems relate to poor interactions, or systems that don’t flex to meet needs, therefore making people’s situations more difficult.
- Some consumers are overwhelmed by complex information and can find it hard to distinguish between promotional material and important messages.
- In some areas, an inaccurate interpretation or overzealous implementation of rules (data protection or affordability) is preventing firms from meeting the needs of vulnerable consumers.
So, what is the FCA definition of a vulnerable consumer?
A vulnerable consumer is some who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.
There are four key drivers behind vulnerability:
- Health – dementia, cancer, MS, mental conditions, injuries
- Life events – divorce, bereavement, redundancy, domestic abuse
- Capability – lack of knowledge, learning disabilities, agedness
- Resilience – inability to withstand emotional/financial shock
Problems faced by firms
Firms tend to have a number of problems when dealing with vulnerable consumers:
- Policy – the lack of a specific vulnerable consumer policy, or policies that don’t allow staff to use their discretion to take account of different consumer circumstances
- Systems – a failure to communicate and train staff on various issues, including how vulnerable consumers should be identified and provided with services
- Products – these can be too inflexible to meet the needs of each consumer, or information is not provided in a form that each consumer can understand
- Implementation – frontline staff are not given the information or training to enable them to deal with consumers in an effective and appropriate manner
The pandemic has created many more vulnerable consumers with 4.5m becoming financially vulnerable, over £6billion in arrears payments, and over a million people turning to high cost credit to make ends meet.
Steps to take
You can assist vulnerable consumers and your business by taking some keys steps, for example:
- Ensure a consistent approach to vulnerable consumers is taken across your business
- Implement appropriate policies and procedures, and ensure these are policed and reviewed on a regular basis
- Train all staff appropriately and update them as things change
- Audit current processes and ensure they are fit for purpose
- Ensure staff are able to effectively work with vulnerable consumers from home
- Provide clear and simple information that can be understood
Remember, vulnerable consumers are not just a Covid-19 phenomenon, they are a fact of ongoing life!
We are committed to helping our customers in these difficult times and can provide various resources and services that can help you protect your firm and reduce the risks you face.
For further details on how we can support, a free recording of our recent webinar on the topic can be viewed here.