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FCA: The challenge of serving vulnerable customers


Last week we published a paper on the treatment of vulnerable consumers. It is intended to contribute to a conversation that the industry, regulators and consumers need to have. One in eight people in the UK act as carers, the number of dementia patients is due to double over the next 40 years and someone is diagnosed with cancer every two minutes. It is vital that firms think about how they can serve all of their customers – including the most vulnerable in society – fairly. 

We know dealing with vulnerability is a real challenge for firms. Vulnerability can cover multiple situations, long- and short-term issues, and can be static or episodic in nature. It can affect the young and old, and most of those who are vulnerable would not necessarily describe themselves as such. Even identifying that someone does not fit into a set mould can be difficult.

It is a challenge for regulators too, as changing demographics pose new questions for us. What is more, the change is happening so quickly and the effects so varied writing rules or issuing guidance can be difficult.

One of the criticisms we often heard when we were doing this work was that some firms adopted an inflexible approach. In one example, a woman suffering from breast cancer and her husband, who had given up work to care for her, asked their bank for a mortgage holiday or conversion to interest-only for a period. They were told they would need to submit a new application that would be subject to standard affordability criteria, which they would not meet due to their recently changed employment status.

It was only thanks to the tenacity of a charity, which negotiated on the couple’s behalf, that the lender agreed to six months free of interest on their mortgage.

Giving vulnerable consumers a good service requires company-wide commitment to doing the right thing. That does not have to mean a wholesale redrawing of processes and systems but, rather, the flexibility to adapt if the strict application of those processes could result in a bad result for the vulnerable.

The first conversation is crucial. Get it right and a person’s situation can be identified, additional help requested (if necessary) and, if recorded properly, can help staff deal with the case effectively in the future. Slip up and the person will have to explain again and again, leading to frustration, embarrassment and, in some cases, stress that exacerbates their situation. It could so easily be avoided.

We know senior management will often step in if there are complaints and try to resolve them but, by then, the damage is done. Front line staff are vital. We do not expect customer-facing staff to become social workers able to deal with a variety of situations they are unused to but we do expect firms allow staff to treat customers as they would like a member of their own family to be treated.

So empathy is important and, while it is a human trait that may be impossible to train, you can give staff the support to express it. In part, that relies on removing the fear some people quite naturally have around “awkward” conversations. Training can help overcome this, as can sharing experiences. Firms can also provide guidance on some of the more common situations; for example, power of attorney or end of life discussions.   

The moral case for supporting vulnerable customers is clear but so is the business case. In getting it wrong, firms put their business at risk. Firms have legal responsibilities and a duty under our rules to ensure customers are treated fairly. More than that, firms should ask themselves what loyalty they can expect from a customer – or their family – given poor service in their hour of need. 

Small firms can lead the way as they are often more nimble and show an increased willingness to be flexible to the customer. This is particularly true in the advice sector, where advisers know their clients and provide a tailored service suitable to individual needs.

To further support firms, our paper comes with a pack intended to help them understand what good looks like for consumers, along with questions to consider when dealing with vulnerability. Ultimately, the question we want all of those who work in financial services to ask themselves is: “If I were in this person’s shoes, how would I like to be treated?” Simply asking that and acting on the answer takes you a long way to resolving this complex issue – and making a real difference to those experiencing difficulties.

Christopher Woolard is director of strategy and competition at the FCA



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There are 9 comments at the moment, we would love to hear your opinion too.

  1. Let it go Steve, just let it go!

  2. Serving vulnerable customers = deviating from the standard process; deviating from the standard process = increased costs; increased costs = increased costs per policy; increased costs per policy = wrath from the regulator…….catch 22 for insurers really!

  3. Nimble technology innovation words we keep hearing.
    Its not going to happen. If someone can’t prove to you as a broker that they can afford their mortgage going forward its impossible to move that mortgage forward for them the only thing you can do is tell them to go back to their current lender and see what they can do for them.

    Financial advice its very difficult to advise someone if they haven’t got a lot of money because you can’t get paid a sufficient amount to fund your time. If you take into account that you have responsibility for life for the advice and the associated pi costs you just cant afford to advise.

    In both above scenarios morally you would love to help but as things stand your hands are tied.

    If you remove all responsibility from a borrower there will be unintended consequences.
    If you remove the ability from the average person to pay for advice by commission there will be unintended consequences.
    If you prescribe margins that can be charged there will be unintended consequences.
    If you use phrases like “be afraid be very afraid” there will be unintended consequences.

    The unintended consequence is if you haven’t got enough money you wont get advice.
    If an advisor can only generate a couple of hundred pounds for a huge liability advice is withdrawn.
    No amount of technology nimbleness or innovation can solve the small margin issue.

  4. Or let one go.

  5. Derek Bradley ceo Panacea Adviser 3rd March 2015 at 1:17 pm

    ‘Fifty shades’ author E L James said, “Language evolves and moves on. It is an organic thing. It is not stuck in an ivory tower, hung with expensive works of art and overlooking most of Seattle with a helipad stuck on its roof.”

    But language shapes the way we think, and now actually determines what we can think about, what is socially correct to think about.

    In an increasingly politically correct world, where a new form of self righteous ‘Puritanism’ seemingly reigns supreme, language has taken a totally new direction in describing many things that previously had a particularly clear understanding as being something else, encouraging some form of self serving, hand wringing, soul cleansing, social inclusion that absolves society of blame or stigmatisation whilst simultaneously removing or erasing common sense, liability, responsibility, guilt and reason from the supposed victim.

    The English language today is being highjacked by some crazy variations of evolution. ??

    According to new ‘diversity’ guidelines, normal persons in the presence of people with disabilities should not be referred to as ‘normal’ but rather non-disabled persons. Clumsy individuals are now called “Uniquely coordinated”, if lazy you are now called “Motivationally deficient”, if you spend spend spend you are now a “Negative saver” and if you are one of life’s failures, in addition to being called vulnerable you are now deemed to have “Achieved a deficiency”.

    If you are Gwyneth Paltrow and Chris Martin you do not split up, you have a “Conscious Uncoupling”.

    Public facing governmental offices and hospitals now have ‘clients’ AND we now no longer have customers- we have consumers’. Grrrrr

    I have become increasing concerned about the prevalence of the term ‘vulnerable’. It seems that in today’s touchy feely, oh so caring society, the term has become overused to the point that it is now meaningless.

    There is not a day that passes where you will not read or hear the word. The BBC is particularly adept at its misuse, regulators, civil servants and politicians likewise.

    Vulnerable as an adjective is described in the Oxford dictionary as “exposed to the possibility of being attacked or harmed, either physically or emotionally”. A thesaurus throws up many other words like exposed, sensitive and defenceless.

    In our industry the vision regulators want the word conjuring up is meant to display advisers’ clients as under ‘fiscal attack’ from unscrupulous and uncaring firms.

    What is your view of a vulnerable person?

    Is it determined by physical or mental disability? Is it financially related?

    Vulnerable is now used as a noun to describe or quantify a social collective, in this case the collective has been formed by way of being seen to be someone cast aside by society, a victim not responsible for their plight and dependent upon someone, anyone, coming along to reset the counter to zero so that they can do it all over again.

    Vulnerable in many cases today is now used to describe someone who previously was known as simple, stupid, irresponsible, reckless, dangerous, a scourge on society and in doing so the truly vulnerable are done a great disservice.

    Regulators are very fond of claiming that “vulnerable consumers” must be protected. A very good example of this is the latest FCA thinking on “Debt management firms selling ‘unsuitable’ plans”.

    We are now looking at the very real possibility of regulation actively protecting people from their own stupidity. That is not a regulatory mandate yet we seem to be powerless to stop it. It is another way of unaccountable bodies generating work to justify their own existence instead of doing what it says on the can.

    The FCA is the Financial Conduct Authority; it is not the Feckless Cuddling Authority.

    In many cases these will be the same ‘vulnerable’ people who avoid the FOS and go to CMC’s in pursuit of a fast buck. After all where there is stupidity there is a stash of cash- for someone, although it is often the case that the stash is for the lawyers as they prey by statute on the vulnerable rather than protect.

    So let’s have a rethink FCA, BBC, Parliament. Vulnerable is that person in a wheelchair, that person who cannot move, see, hear, walk, talk, and feel and is truly reliant on someone else to care for them.

    It is not someone who was previously known in a different socio economic time as a waste of space and should be avoided at all costs.

  6. MMR and RDR are your initiatives. You have failed. You have not listened. You have not tried to understand either the market or the advisers who serve it.

    At a fundamental level you have been and continue to be utterly useless.

  7. In Carry on Constable there is a flustered old lady who is stood on the edge of a very busy road and so a young PC Kenneth Williams stops the traffic and helps her across. At which point she goes loopy because earlier she had just spent twenty minutes waiting to cross the road in the opposite direction and she was back where she started! Identifying someone who is vulnerable is not as easy at it might seem and as I found out to my cost a vulnerable person will probably have full capacity in law. You cannot assume and yet by checking their circumstances you can come across as being uncaring, insensitive and unsympathetic. It is a lengthy process. Therefore helping, guiding or advising them comes at a risk to us as CMCs and/or family members are likely to make things difficult for you if you cut corners i.e. there is no quick fix in many cases!
    Anyone who comes to us will never be treated as a waste of space and we will always try to help. Unless the FCA regulate and price us out of existence…….

  8. Has society becomes so arrogant that a little bit of compassion could not be shown to other members who are less fortunate than ourselves whether through poverty ill-health or lifestyle circumstances.

    If you actually read and take a minute to absorb what Christopher Woolard was saying. If employees are trained to listen and apply common sense (a rare commodity in today’s world) It will go along way.

    Not only would it place business in a good light training in this area would make an employee feel more valued.

  9. I like Derek Bradley’s comment, I wish I had written it. One point, I think the FCA have already gone past the point where they believe financial services customers should be protected from their own stupidity. Indeed, the FOS crossed that Rubicon even further back.

    Overall I think there are some good points made in the article but in the end it is all about balance. Problems arise when papers like these create unrealistic expectations. What starts as good practice, with some very pointed examples of where firms could have done better, seeps down into something a lot more insidious. A case of the FCA not thinking through consequent behaviours?

    For example, this just presents another opportunity for more astute customers (for whom it was never intended) and CMCs, etc. to add another argument to a firm’s allegedly inappropriate behaviour. On this vein, John Clancy’s point is well made, if a little naive. When making a complaint going forward it will probably assist to portray the customer as ‘vulnerable’ in light of this paper. Indeed, I’ve seen this card played before with the FOS and it works a treat – the ‘vulnerable’ little old lady who was nothing of the sort – but they fell for it boathook, rope and lead weight. This just makes it easier and spreads the ‘vulnerable’ net much wider.

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