FCA Report an important step in understanding and addressing consumer vulnerability
The Financial Conduct Authority (FCA) recently released a paper that aims to broaden understanding and stimulate interest and debate around vulnerability. It also aims to provide practical help and resources to firms in developing and implementing a vulnerability strategy.
The report identifies the scale of vulnerability in the UK, and the common barriers to effective engagement for vulnerable clients. Vulnerability can affect consumers across all financial products and services. The issues raised in the paper are relevant to all financial services firms that engage with consumers.
Key areas to explore to enhance the consumer experience
The report outlines simple steps that firms can implement to dramatically improve the customer experience, achieving a better outcome for all parties.
- To ensure a consistent approach that is embedded across all operations, and all staff are aware of.
- Firms could begin by auditing current practice.
- Staff on the front line should have sufficient training to facilitate a proper conversation and that they know where internal expertise lies.
- Flexibility in the application of terms and conditions of products and services plays a significant role in ensuring the needs of consumers in vulnerable circumstances are met.
- An efficient process for referring consumers on to specialist teams who have authority to make flexible decisions is important.
- Clear, simple information and explanation throughout the product life cycle is important to all consumers.
What does ‘good’ look like to consumers?
Based on their research the FCA make recommendations that they believe consumers in vulnerable circumstances will benefit from. They include;
- Having financial products that are clear and easy to understand.
- A choice of ways of communicating.
- Treat consumers as individuals.
- Offer flexible and tailored response to those who experience a change in circumstance.
- Let customers talk to someone who will take the time to listen, who is flexible enough to let the conversation take its natural course, and who is sufficiently trained to spot signs of vulnerability and refer on to specialists where necessary.
- If consumer discloses information about their needs, that information will be recorded properly so that they do not have to repeat it every time theymake contact with all departments of a particular firm.
- Proactively contact clients if they may be having financial difficulties.
The report reflects the Behavioural Insights Teams recent findings that it is often the first contact with a customer that is critical achieving a positive resolution.