Posted: 9th June 2015

We’re in the midst of an industry trying to find its sense of social purpose

The regulator’s focus is on customers, and the issue of customer vulnerability is a core policy debate, and “a key test of conscience for the City.”  The FCA’s recently published ‘Occasional Paper’ to stimulate debate in the industry on this very  matter, is clear evidence of its interest in this area.

There’s much that can be said about the ‘how’ and the ‘who’ in terms of identifying and servicing vulnerable customers, but I think it’s important to first get to the heart of the ‘why’.

You’ll all most likely know somebody in a vulnerable situation. In fact, we can all face times of stress and difficulty, times when our abilities to cope can be compromised. There are statistics in the ‘Occasional Paper’ which include surprising figures such as:

One in seven adults has literacy skills that are expected of a child aged 11 or below
The current number of people living with dementia (800,000) is expected to double over the next 40 years
Every two minutes, someone in the UK is diagnosed with cancer
In any given year, one in four adults experiences at least one mental disorder

These statistics raise questions on the adequacy of regulation and legislation today, which is predominantly designed for ‘average’ or ‘typical’ customers; what they might expect, understand, or how they might behave. Customers in vulnerable circumstances – which judging by these figures cannot be seen as a marginal group – might be much less able to represent their own interests. They’ll also be more likely to suffer harm than your ‘average’ customer. Firms and regulators must be pro-active to make sure they’re being suitably protected. In this vein, the FCA states:

“Financial services need to be able to adapt to the changing circumstances that real life throws at people, rather than being designed for the mythical perfect customer who never experiences difficulty.”

Customers in vulnerable circumstances generally don’t have positive stories about how they’ve been treated. They’ve often found that businesses can’t easily cope with the differences between them and your so called ‘average’ customers. The FCA acknowledges that despite good intentions, there is much room for improvement.

Firms should start thinking about bridging the gap between policy and practice. Senior leaders should focus on filtering their well-intentioned efforts down to middle management, and most importantly frontline staff. Allowing staff the flexibility to adapt to a diverse customer base, whilst maintaining consistency and control, is not easy. How do you deliver products and services for those customers who don’t tidily fit into ‘usual’ customer profiles? And, how do you avoid aggravating already difficult personal situations?

In essence:

The way you design your systems and processes can make a huge difference to how easily vulnerable customers can interact with you
Training your staff to listen and understand, and equipping them with flexible options can help
On occasion, it may prove useful to enable your staff to refer any problems to specialists that have the expertise and the discretion to be able to deal with difficult situations

The Occasional Paper brings attention to how important it is for leaders to take the time to respond to the FCA’s forward looking questions.

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