Majority of lenders adapt vulnerable client policies

Majority of lenders adapt vulnerable client policies

The majority of lenders have adapted their vulnerable clients policies in response to the Covid pandemic, but many are still relying on staff to identify vulnerable clients, the FCA has found.

In a report out yesterday (March 25), the Financial Conduct Authority said out of the 17 lenders questioned between November 4 and February 25, 2021, all of them had vulnerable client policies in place.

Of these, the majority (94 per cent) had reviewed or added to these policies in light of Covid 19, while half (47 per cent) had a dedicated team in place to refer vulnerable clients to.

Article continues after advert

But the regulator found all lenders relied on staff to identify and help vulnerable clients and only a few approached this topic via digital means.

This could be an issue at times when recruitment numbers are high.

Of the nine lenders where the FCA reviewed automated approaches, two asked clients at the outset if they were experiencing physical or mental health issues, as well as circumstances that may affect their ability to manage their finances. If so, they were re-directed to specialist support.

Meanwhile, other firms had pushed forward plans to automate aspects of client support.

The FCA found that in most cases these automated approaches were easy to navigate with minimal steps and helpful menus for customers to select from. 

However, it said some firms could make improvements, in particular “around the ease of access to non-digital support”.

Sheldon Mills, executive director, consumers and competition at the FCA, said: “As we move into the next phase of the pandemic, we want to reassure consumers that they will continue to receive fair and appropriate support. We encourage those in difficulty to contact their lender to discuss their options.

“We’ve been monitoring how firms are providing support and found they have responded well to the challenge of providing tailored support, but there is more to do. We’ve set out where firms need to improve in a report on how they are implementing tailored support.”

The FCA’s report identified areas where lenders could improve, including ensuring staff are adequately trained in order to deal with queries and issues.

It found due to the pandemic, some lenders anticipated an increase in demand from clients in financial difficulty and so recruited more staff. 

As a result, there has been a significant increase in inexperienced staff helping clients, which the FCA said may lead to an increased risk of harm. 

According to the regulator, firms are expected to ensure that all staff are adequately trained and should have “appropriate oversight” of new staff to ensure that the right support is being provided.

The FCA has urged lenders to review its recent guidance on vulnerability and to update their processes to reflect this.

The FCA's report came after data published by the FCA last month (February 11) found the coronavirus pandemic had propelled the number of vulnerable adults in the UK to almost 28m last year, prompting warnings of growing financial inequality among the population.