The release of the FCA’s latest Financial Lives survey, which found that 49% of UK adults have one or more characteristic of vulnerability, demonstrates the pressing need to understand customer vulnerability, argues specialists MorganAsh.
In addition to more than 26 million adults living with one or more characteristic of vulnerability, the survey found that around one in ten (4.8 million) adults are in poor health and/or with cancer, MS or HIV. Among this group, 58% experienced difficulty interacting with providers or managing their finances.
The survey also found that people dealing with an income shock or relationship breakdown are most likely face difficulties dealing with their finances or with financial services. Meanwhile, one in ten people in Britain have zero cash savings, with an additional 21% having less than £1,000 in case of an emergency. Around 1.6 million borrowers have already received support from mortgage or credit lenders to manage repayments in the last two years.
The new data follows the findings of the FCA’s recent multi-firm vulnerability review, which found that many firms still can’t monitor or take action on outcomes for vulnerable customers. This is despite the renewed emphasis from the FCA on Consumer Duty.
Speaking recently, Nick Hulme from the FCA confirmed this, saying: “Vulnerability is the lens through which we are looking at firms’ overall implementation of the Consumer Duty.”
Andrew Gething, managing director of MorganAsh, a support services provider to the utilities and financial services sector, argues that firms need to get to grips with customer vulnerability and equip themselves with the necessary processes, data and technology to meet this responsibility.
Andrew Gething said: “When you consider these important findings, it will simply not wash if your firm still says that you have a small percentage of vulnerable customers – or even none. We know from other FCA research that this is a commonly held view in certain sectors. Just as worrying is that many firms say customer vulnerability is not their concern. If it wasn’t clear enough already, there is a pressing need for all financial services firms to get to grips with customer vulnerability and equip themselves with the tools and technology to make this happen.
“The survey demonstrates the size and scale of customer vulnerability in the UK, whether it’s because of poor health, negative life events, low resilience or low capability. We absolutely need to know who those customers are – so we can provide the right service, support and importantly, the right outcomes. No sector is immune either – users of the MorganAsh Resilience System (MARS) report identifying figures in line with the FCA’s Financial Lives survey, and our partners at PayPlan say that an increasing number of people with mortgages are using their debt advice and solutions.
“With the right technology and processes in place, it’s easily possible to identify vulnerable customers consistently, monitor outcomes and report on findings. This also provides robust data which is absolutely critical. Doing this, we can not only ensure we minimise potential harm, but also improve on outcomes, identify commercial opportunities and deliver a far better and more personalised service. The evidence is all there; it’s up to financial services firms to respond to these findings and ensure they are stepping up for the many vulnerable people who inevitably make up their customer base.”
In the latest upgrade to the MARS, MorganAsh has enhanced the software’s reporting to enable firms to see the proportion of vulnerable customers benchmarked against the FCA’s vulnerability categories. Users can also now benchmark their company’s results against all MARS users and the FCA’s Financial Lives survey – providing a useful gauge of progress.
Recently, MorganAsh also announced the launch of a series of workshops on customer vulnerability, to help firms get to grips with the topic and meet the requirements of Consumer Duty.
MorganAsh is a specialist in Consumer Duty and customer vulnerability. The firm launched its award-winning MARS platform to help firms 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.
