A customer may easily reveal the fact that they are blind or hard of hearing, but how many will want to tell you that they are going through a relationship breakdown that is about to halve their income?
Just Group’s own research into the identification of vulnerable customers found that most regulated firms they spoke to had identified not much more than 1 per cent of their customer base as being vulnerable. This feels woefully short to me.
Therefore, what are providers and IFA firms going to need to do to keep on the right side of the FCA in this delicate area?
The guidance document makes clear they need to think in terms of generating six core “outcomes”, listed below.
| The FCA's consumer outcomes that firms should strive to achieve for all customers |
|---|
| Outcome 1: Consumers can be confident they are dealing with firms where the fair treatment of customers is central to the corporate culture |
| Outcome 2: products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly |
| Outcome 3: Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale |
| Outcome 4: Where consumers receive advice, the advice is suitable and takes account of their circumstances |
| Outcome 5: Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect |
| Outcome 6: Consumers do not unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint |
What the guidance makes clear is the outcomes for vulnerable customers need to be at least as good as for those of all other consumers.
So what does this mean for leadership teams across the industry?
Core to achieving this aim is adapting the company’s culture to focus its staff, products, services and processes towards the fair treatment of vulnerable consumers.
The document states: “We expect leaders in firms to manage the drivers of behaviour in their firms to create and maintain cultures which reduce the potential for harm, particularly with respect to vulnerable consumers.
“This means that when interpreting what this guidance means for a firm, it should ensure this applies across the whole organisation, starting at the leadership of the organisation and permeating across the firm so that doing the right thing is the responsibility all staff.”
The FCA paper asks all regulated organisations to examine how they acquire leads, and make sure they are taking account of how vulnerable people may respond differently.
Companies may need to examine if – based on the fact that they are targeting a portion of the population that is likely to be exposed to a vulnerability such as indebtedness – they need to put more safeguards in place to make sure consumers are not making decisions in haste against their long-term interests, while in a temporary position of vulnerability, for example.
Better safeguards might need to be put in place to identify vulnerable customers and categorise them according to the different types of vulnerability.
Then their customer journey can be adjusted to ensure better outcomes.
Just Group’s ‘Dealing with vulnerable customers – the industry’s response’, which was published ahead of its Annual Leaders’ Summit held in February 2019, offers some great insight into how far the industry has gone to address the issues of treating vulnerable customers fairly.
