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