Redefining your approach to vulnerable customers in 2022 – session review

Frank Brown, Practice Lead, Non-Investment Financial Services, at Bovill, joined our CEO – Adrian Harvey – on the 8th December 2021 for our latest webinar: Redefining your approach to vulnerable customers in 2022.

In the last 12 months, financial firms have been facing higher levels of scrutiny of their processes and practices for identifying and servicing customers in vulnerable situations.

Our hosts began by examining the broad spectrum of vulnerability within the financial services sector. Adrian and Frank then went on to contextualise what that may look like in terms of processes and employee competency, especially where firms are currently operating from an online-only or hybrid business model with a dispersed workforce.

Our thanks to all who attended and actively took part in the discussions. The webinar is now available to access on-demand below.

Available on-demand, watch the webinar session here…

Frank opened the session by addressing why there’s “some degree of frustration” from the regulator for those firms that aren’t quite getting the message, touching on the FCA’s four high level principles.

To help firms distinguish what constitutes a vulnerable customer, the panel drew upon the FCA’s published guidance to interpret the categorisations that most of them will feel comfortable recognising – those being ‘health’ and ‘life events’ – and those frequently overlooked, ‘resilience’ and ‘capability’.

“If your business trades on its reputation… getting vulnerability wrong is inviting really poor public feedback.”

– Adrian Harvey

Opening up the discussion to our audience with a poll, we found that the FCA’s ‘monitoring and evaluation’ expectation was considered to be the greatest foreseeable challenge, with 62% in agreement.

Whilst two-thirds felt capable of ‘taking practical action’, our hosts challenged whether that was a fair assessment considering the lack of confidence to first monitor and evaluate where those actions might need to take place within a process or business framework.

Q1: The FCA’s guidance contains six key expectations that are designed to ensure that all customers are treated fairly, regardless of their circumstances. Which expectation(s) are proving most challenging to meet in your firm?

  • Monitoring and evaluation 62% 62%
  • Take practical action 33% 33%
  • Skills and capability 26% 26%
  • Understanding customer needs 23% 23%
  • Communications 21% 21%
  • Customer service 9% 9%

*Poll results based on 165 responses. Multiple selection allowed.

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Download a range of helpful free e-guides that showcase how some of the world’s best-known financial brands are deploying Artificial Intelligence to access best-in-class, granular evidence of genuine employee knowledge and competency for regulatory purposes, including:

“Firms are struggling to understand [capability as a form of vulnerability], struggling to spot it and struggling to do something effective about it.”

– Frank Brown

Adding to this, Frank went on to talk about low confidence and low understanding of financial services being the “unacknowledged, uncontrolled, unmonitored vulnerability”.

Adrian elaborated on this point by linking how an organisation’s approach to employee training and competency directly impacts the ability for that organisation to comply on an individual basis to the regulator’s standards of vulnerability handling.

“You need to understand the actual level of competency of your individual employees in relation to customer vulnerability, and then you need to understand the gaps. It’s not a team sport… it’s on an individual agent level.”

– Adrian Harvey

On methods of assessing vulnerability, Frank highlighted that whilst great in principle, taking a one-off questionnaire with new customers could offer flawed results.

A lack of employee competency to support a vulnerable customer is a “cultural red flag”, claimed Adrian, and does not reflect an authentic approach to genuinely delivering what is needed to the customer.

For online or digital-only businesses, the risk is especially high, which our panel discussed in relation to the regulator and what additional expectations they’ll likely have on a firm’s proactive efforts to helping those in a vulnerable position.

Whether digital-based, or with communications predominately over call or face-to-face, Adrian spoke with our panel about why people are the first line of defence and a critical component to getting this right; hence the necessity of optimising your own internal training and support.

Q2: Would you say your staff are confident and well equipped to deal with vulnerable customers?

  • Yes 16% 16%
  • To a degree 79% 79%
  • No 5% 5%

*Poll results based on 165 responses.

“Vulnerability is not a fixed state. It changes.”

– Frank Brown

The conversation turned to spotting early indicators, better developing offerings and being accountable where customers have been provided via a third-party provider.

Having polled the audience for a second time, Frank acknowledged that 79% believe themselves to have a degree of confidence but indicated that the realistic result might – truthfully – be towards the lower end of the scale rather than higher.

“If the importance that’s being attached to this is: ‘we’ve trained the people, we tick the box, we’ve got the mechanical stuff sorted’. Then that, to a degree, is going to fall short.”

– Adrian Harvey

Rather than solely being a ‘from the top’ responsibility, Adrian’s argument is that every person within an organisation is responsible, which means that every interaction and every choice made by an employee needs to be considered and applied against the wider scope of their training and understanding of vulnerability and the core drivers.

Further to the point, with team oversight inherently compromised by remote working practices, Adrian and Frank discussed how compliance is maintained and evidenced by firms, and whether it’s enough to simply ‘tick the box’.

Describing people as the most powerful asset within a firm, Adrian’s priority would be to make sure every employee is competent, capable and understands how a vulnerable customer affects their unique role.

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