'Risk that people in vulnerable circumstances could fall through the cracks'

Riffat Tufail, who leads a team of 10, told FT Adviser it was imperative that financial services organisations and advisers helped people understand their options, make financial decisions and guide them through vulnerable situations and circumstances. 

She hailed consumer duty as focusing the collective minds on vulnerability, and revealed some of the findings from recent work Phoenix Group has done to explore vulnerability and consumer psychology around finances. 

FT Adviser: How has consumer duty helped focus our minds on vulnerable customers? 

Riffat Tufail, head of customer vulnerability at Phoenix Group: "For us, consumer duty was just a continuation of the work and the journey that we have been on since 2018, 2019. 

But we believe consumer duty raises the bar again, and helpfully.

It has created the right focus across financial services and given us this common language to understand what are good outcomes, and what is the risk of harm.

Our job is now to make that positive outcome and value tangible for the customer.

The challenge now is to make sure we tailor and adapt our processes and services, to make sure that if someone is in a vulnerable circumstances, they are getting the best possible outcome. 

Consumer duty has galvanised a lot of the energy and the focus on the market on 'service', which is very much at the heart of what advisers are doing anyway.

Our job is now to make that positive outcome and value tangible for the customer, whether or not they are vulnerable."

FTA: Talk to us about some of the research you are doing, and why?

RT: We are very much insight led.

Every year for the past three years we have done research with customers right across the brands to understand the scale and the nature and the types of vulnerabilities they are being challenged with. 

We ask them about their experiences and their expectations.

A lot of the time it is not bell and whistles - they just want us to embed in our processes their need for empathy, for flexibility, or for that human touch, and this is very much at the core of what we are designing.

We are in a journey now to share our learnings with other firms and we want to hear from others, too. We want to talk with the third sector, advisers and other financial services firms and learn from them.

I have this utopia I would like to get to, where we can create a baseline for anyone in vulnerable circumstances, which is formed from where we have excelled in different areas.

We have been holding a series of discussions. For example, we had an internal summit for the top 50 leaders in our business to get them used to the new strategy and framework. Then we extended this to the Scottish financial partnerships through Scottish Financial Enterprise.

They just want us to embed in our processes their need for empathy, for flexibility, or for that human touch.

We've spoken with solicitors and advisers who talk to people in vulnerable circumstances every day, and we then created a report that outlines where we are as an industry, and where we can collaborate.

Our third summit in February is going to bring a broader range across the public and private sectors, internal colleagues, industry peers and financial advisers.

We are hoping that we can bring the DWP in as well - it is going to be a fantastic opportunity to have a broader conversation about financial vulnerability and how to address this."

FTA: What sort of findings has your research revealed?

RT: Our Retirement Voice analysis has helped us understand attitudes and emotions. With Covid-19 and the cost of living crisis, a lot of people are saying the current pressures are making them worry about their financial future.

A quarter of people have said they have sleepless nights worrying about money. And we know financial issues contribute to poor mental health. 

This can create what is known as the Scarcity Mindset - which some psychologists say is the equivalent of losing 14 IQ points.

We partnered with a behavioural consultancy, as we needed to understand the psychology behind people making financial decisions.

We've found several factors at play, such as cognitive overload, whereby if you are presented with too much information and too much choice, it is unhelpful.

There are also aspects like the scarcity mindset or fearfulness, if you have been scammed before. Victims have been burned by scams before, and that adds to vulnerability.

FTA: How have you been incorporating these findings into your business?

RT: We continuously update our e-learning, which is founded on 30 behavioural science principles to help our colleagues understand vulnerabilities and behaviours, and give the customers the space to stop and think and potentially help them to get financial advice.

For example if they are not confidence about the decisions they are about to make, helping them to stop and think and to bring a third party, a trusted person, into the conversation can help provide comfort and confidence.

FTA: How many widows and inheritors do you look after? How do you help them through their vulnerable situations?

RT: We have lots of widows and inheritors. In Standard Life alone last year 2022 we dealt with 16,500 life claims where the policyholder had passed away, and there was a bereaved relative and family and they had to come to use to make a claim.

I think our team is fantastic. The bereavement journey with us has a lot of care and empathy built into it. 

For example, we make sure the person has a dedicated contact. At what may be the hardest time of their lives they do not want to have the same conversation over and over, with lots of people at the company.

To give your best, you need to feel your best.

It may also be the first time some people have had to deal with that particular process after bereavement, so our bereavement team go through through resilience training to help clients.

They often have to deal with very difficult calls, and so there is also a need to protect our colleagues. To give your best, you need to feel your best.

We partner with the Samaritans who are experts in listening and empathy - we use the Samaritans listening wheel [above] and build training around this for our teams and others dealing with difficult situations, such as serious ill health

We also have relationships with charities such as Cancer Research, and we ask them and other charities to educate and upskill us in dealing with certain scenarios to close that empathy gap.

FTA: Is there a lack of financial literacy, and how profound is it?

RT: Definitely alongside financial vulnerability is a concerning lack of financial literacy - people may know nothin about the plan or what it was there to do.

It leads to that broader conversation point on finances. Now I know we don't talk about finances as a society - it's not the done thing, but we need to educate ourselves and our children in schools and talk about money and financial arrangements.

This is really important. Things like having a power of attorney in place are vital, so that if there is a time when you can't look after your finances, you have enabled someone else to make decisions on your behalf if need be.

The adviser is often treated as an extended member of that person’s family.

When I went to an IFA to get a will and POA, it was explained to me that the POA was for when you are alive and the will was for when you are dead, and you need both.

That preparation is so important because we often find people who are beneficiaries and relatives do not understand what the person's finances were all about. We have to help them understand what the policy was for, and what their options are now. 

We also give them appropriate signposting to advice to help them with future decisions. 

FTA: What sort of communications should advisers have with providers about supporting vulnerable customers?

RT: There is a risk that people could fall through the cracks.

My view is that we all have the same regulator. Through our summits and our work with advisers, we have been sharing some of the research we have done and the guidance we have created around recognising vulnerability and what sort of solutions we have put in place.

We have created some materials for any advisers but it is important for us as well to learn and to understand from advisers any insights they have around vulnerability.

It's a two-way conversation.

Advisers are trusted by their clients. 

We see how the adviser is often treated as an extended member of that person’s family and for us, advisers can help us understand better and well what tailoring and flexibility and solutions would be most appropriate for their clients

It is about having that dialogue and signposting solutions we can offer to help them and their clients on that journey.

FTA: So where do we start?

RT: That's a good question. Vulnerability is broad and, when the guidance first came out from the FCA, it was clear the drivers of vulnerability were great starting points but so much more work needs to be done.

For example, you can't just assume someone is vulnerable, even if their circumstances would suggest vulnerability. 

Say someone tells us they are going through a divorce. Are they vulnerable? Is this a vulnerable circumstance? We need to be led by the client. 

Clearly, if they are very emotionally distressed, we don't want to walk past that, as we want to help address that situation. 

Not everyone will know they are vulnerable.

We offer them the option to have someone join the call for emotional support, for example.

But although sometimes there are obvious signs where we need to explore, we cannot assume someone is vulnerable.

The gold standard is where the customers declare to you that they are vulnerable. But that isn't everyone and not everyone will know they are vulnerable. 

This is why the research we are doing into vulnerability disclosure is so important, and something we want to share across the industry. 

It will help us create context and understand what language we should be using, and how to understand and respond to people's responses on vulnerability disclosure. 

Culturally, post Covid, the term 'vulnerable' became more used, and people became more open about it. 

Discussions around mental health are becoming more open and that is a helpful milestone towards helping clients with disclosure and with taking them through their journey with us.