Posted: 4th May 2015

Financial services firms are under increasing regulatory pressure to ensure that all customers receive fair service and good outcomes.

This is a seemingly obvious demand, but in the context of vulnerable customers, poses quite a challenge for firms.


Identification is an early hurdle in the customer journey of anyone deemed to be ‘vulnerable’. How can firms ensure they identify all types of vulnerability, all of the time? Short of asking deeply personal questions, frontline staff, and those in customer services have little at their disposal. In many cases, staff have a limited window to identify a wide range of potential vulnerabilities, including but not limited to:

  • Physical disability
  • Mental health issues
  • Learning difficulties or reduced comprehension
  • Financial vulnerability (due to debt, unemployment, etc.)
  • Non-English speakers
  • Dynamic vulnerability. Often associated with financial vulnerability (due to divorce, etc.) but could be applied to any of the above.


Is it perhaps right then that customers themselves should be relied upon to provide accurate information about their personal situations relating to vulnerability? Dynamic vulnerability is a particularly tricky area – predicting the future is a notoriously inexact science, and beyond reasonable stress-testing, firms are reliant upon customers telling the truth.

Herein lies another problem: customers don’t always share the whole truth. This can be deliberate, in order to gain access to certain products and services quickly, or that would have been unavailable to someone in their position. It can also be accidental, born of confusion or a lack of understanding. Nevertheless, firms could potentially be on the hook if those customers slipped through the net, received a bad outcome, and proceeded to complain.

As an example, let’s consider post-sale servicing, and let’s use a non-English speaker as our example of a vulnerable customer. This customer can walk into a branch seeking a product, and is easily identified as being vulnerable. In the best case, a salesperson is sought who speaks the same language and this customer is now in a position to engage on an equal basis, potentially also leaving the branch with documentation that has been translated into their native tongue. This all seems well and good, but what happens if that same customer needs to make an urgent change to their product or needs to update their personal details? Going online or calling a customer contact centre isn’t going to deliver a good outcome if the customer can’t read or understand the content. Having to wait for a branch appointment with a native language speaker might be their only option, and the wait leaves them open to detriment.


Firms themselves are vulnerable too. Vulnerability is not black and white; it is complex, dynamic, and unique to each customer’s personal circumstances. With so many variants, and a reliance on customers to self-identify in many cases, firms are fighting an uphill battle. Until the regulatory responsibility associated with vulnerable customers is shared, much work needs to be done by firms to safeguard themselves while delivering universally fair outcomes.

Some areas for firms to consider are:

  • Identification – are frontline staff trained appropriately? What processes exist to support identification?
  • Categorisation – are vulnerable customers categorised consistently across the firm, and through various distribution channels?
  • Escalation – once identified, are vulnerable customers effectively and efficiently passed on to more specialised teams with the appropriate skill-sets?
  • Communication – what is the right tone and language to use when informing customers that they have been categorised as vulnerable? Is ‘vulnerable’ even the right word?
  • Continuity – are customers, whether already identified as vulnerable or not, re-assessed regularly and provided with adequate servicing?
  • Culture – is your culture empathetic of customers in these broad groups, and focused on customer outcomes?

There are, of course, many more issues to grapple with. A review of your existing frameworks and policies, and current regulatory guidance should be a first step for anyone in a compliance role.

Through our interactions and engagements with clients, it is clear that when it comes to vulnerability there is no ‘one-size fits all’ approach. After all, products and services are targeted at different demographics, and this in itself leads to different levels and types of vulnerability.

Our experience shows that this is an issue that requires thinking and processes that reach beyond the normal regulatory requirements; it is a sensitive issue, full of emotion and humanity. To make sure that customers get the best outcomes, and that firms are able to protect themselves, a shift in perspective is required. Until then, consider the approach you take, the customers you service, and the safeguards you require.

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