Getting consumer vulnerability right in 2024 will need to be a focus for financial services companies, a senior consultant has said.
Michael Anderson, vice-president of client management at Davies Consulting Division, said consumer duty must consider more than just age vulnerability - it must take into account health, socio-economic, physical, and digital vulnerabilities as well.
He said: "Specifically in the financial services sector, consumer duty and operational resilience will be front and centre as the banks will have to demonstrate how they are adhering to the respective guidance and legislation."
Anderson said Davies Consulting has particularly focused on vulnerable customers, which is a core component of consumer duty.
He notes the latest report from the FCA states: "While some firms considered treatment of vulnerable customers within their reviews of products and services, this was lacking in some firms’ documentation.
The technology is here now, but it’s not a simple ‘plug and play’ solution.Michael Anderson"We remind firms that the duty raises the standard of care to all consumers. Our guidance on the fair treatment of vulnerable customers sets out what firms should do to ensure customers in vulnerable circumstances experience outcomes as good as those for other consumers."
According to Anderson: "We believe ‘vulnerability’ goes beyond financial vulnerability as there is also digital vulnerability, health, physical, socio-economic, ageism etc and as such, how to better understand and manage all vulnerable customers is a strategic imperative for all sectors.”
But this is not the only challenge. According to Anderson, AI is also "vexing the C-suite”, as all sectors and clients are challenged with trying to understand how to understand what the impact of AI has on them and on their customers.
He said: "This new dimension is vexing the c-suite on where or how to embrace this new technology. We are strong on the opinion it is too early to use AI to serve a customer, but we do see it can be a great force for good in supporting the agent in so many ways.
"We call this the ‘Digital Shoulder’. The technology is here now, but it’s not a simple ‘plug and play’ solution. Many capabilities need to sit behind it including the quality of the customer data and the effective use of knowledge management."
simoney.kyriakou@ft.com
