Customer vulnerability specialist MorganAsh has welcomed the Government’s new Financial Inclusion Strategy, calling its renewed commitment to “financial resilience through insurance” as essential. However, it warns that financial services firms must first understand customer vulnerability, and know who their vulnerable customers are, to truly become fully inclusive.
The Government wants to both increase access and remove systemic barriers – with the aim of creating a financial services system that works for all. The strategy includes a full programme of initiatives and interventions built around the cross-cutting themes of mental health, accessibility and economic abuse – to help improve education, address longstanding challenges and increase financial resilience, particularly among those who are vulnerable or currently underserved.
The strategy recognises the role of protection and general insurance products in helping households to weather financial shocks – while identifying that those who are vulnerable, or on lower incomes, are often less likely to be insured or hold appropriate cover.
Customer vulnerability specialist MorganAsh strongly supports the Government’s aim to close these gaps, particularly around contents insurance and income protection – as well as both removing barriers to products and services and increasing support for vulnerable customers. MorganAsh also welcomes calls for greater support from financial services firms for victims of economic abuse, especially those dealing with well-documented issues surrounding joint life policies.
However, MorganAsh also warns that without robust vulnerable customer management systems and aligned processes, firms risk not knowing who their vulnerable customers are – and whether products and services misjudge or neglect their needs. MorganAsh argues that, without the right data, firms are unable to deliver personalised support and therefore risk undermining both inclusion and good customer outcomes – as required under Consumer Duty.
Andrew Gething, managing director of MorganAsh, said: “It is positive to see that general insurance and protection are key considerations within the Government’s Financial Inclusion Strategy, recognising the sector’s essential role in building financial resilience. It make some very important points for all firms across financial services – and identifies key actions required to close gaps and increase access for all, whether that’s insurance, banking and affordable credit – or tackling problem debt and financial illiteracy.
“The strategy correctly identifies the significant protection gap, especially among those who are low earners or are vulnerable. Increasing inclusion can only start by understanding those currently being excluded and what the barriers of entry may be – whether it’s perception, understanding, trust or a lack of products or support. These deeper insights are only possible with the right technology and processes in place to properly segment a firm’s customer base, understand their circumstances and importantly, the outcomes they are receiving.”
Systems and processes, data infrastructure and reporting are set to be the main focus of upcoming vulnerability guidance, due to be released by the Chartered Insurance Institute (CII) immediately prior to the Budget. The guide will provide firms across the insurance and personal finance sectors with actionable insights to help meet the requirements of Consumer Duty and support vulnerable customers.
“The upcoming guidance will support firms across insurance and personal finance to embed the values and principles of Consumer Duty and good vulnerability management,” Andrew said. “With these solid foundations in place, firms are then able to unlock the competitive advantage of Consumer Duty and the commercial benefits of personalising products and services – and supporting customers in a deeper, more meaningful way. Just as important is the role businesses can then play in supporting the government's mission to drive social mobility and improve financial inclusion.”
MorganAsh launched its award-winning MARS platform to enable firms to better understand and monitor vulnerable customers and deliver good outcomes – as required by Consumer Duty. It is in use across financial services and the utilities sector, enabling businesses to adopt a consistent approach to identifying vulnerable characteristics and generate an objective Resilience Rating – much like a credit score.
