At Bridge Investments, we are of the view that it’s important not just to help you understand how to manage your finances, but also to give you an overview of what key issues are impacting on the financial services industries. In February this year, our regulator – the Financial Conduct Authority (FCA), released an occasional paper on Consumer Vulnerability and how they plan to tackle this important topic. In our article, we outline some of the key points to help raise awareness of consumer vulnerability and those close to you who may need support.
The FCA feel that people in vulnerable circumstances may not be receiving fair treatment from their financial services providers and whilst there are examples of good practice in some firms, some individuals find communicating with providers or accessing products difficult. They also stated that vulnerable consumers may find that they are unable to obtain a flexible, tailored service that meets their needs from firms.
With this in mind, the FCA want to help firms within the industry identify consumers in potentially vulnerable circumstances, and attempt to describe what ‘good’ looks like in serving those consumers. Their paper aims:
- to broaden understanding and stimulate interest and debate around vulnerability and;
- to provide practical help and resources to firms in developing and implementing a vulnerability strategy
Why does this matter to us all?
As a regulated firm we are mindful that vulnerable consumers must be adequately protected. This is particularly true when more and more services are increasingly offered remotely and online – which in turn, and unfortunately, does not meet the needs of all consumers.
Recognising Vulnerable Consumers
So what does a vulnerable consumer look like? It is important that we all understand how to recognise when either we or someone in our family may need help and to ensure they are getting fair treatment from financial service providers. The following examples from the paper show that there are definite risk factors such as:
- low literacy, numeracy and financial capability skills
- physical disability
- severe or long-term illness
- mental health problems
- low income and/or debt
- caring responsibilities (including operating a power of attorney)
- being ‘elderly’ for example over 80 (may be associated with cognitive or dexterity impairment, sensory impairments such as hearing or sight, onset of ill-health, not being comfortable with new technology)
- being young (associated with less experience)
- change in circumstances (e.g. job loss, bereavement, divorce)
- lack of English language skills
- non-standard requirements or credit history (e.g. armed forces personnel returning from abroad, ex-offenders; care-home leavers, recent immigrants)
Consumer vulnerability can occur at any time throughout our lifetime and people in vulnerable situations would not necessarily see themselves as being ‘vulnerable’.
What financial firms can do to make things easier for consumer vulnerability?
At Bridge Investments, we appreciate that it’s not necessarily a natural response to consider whether or not you or someone you know is in a vulnerable position. That’s why taking the time to get to know you, your circumstances and when things have changed in your life is important. We agree with the FCA that the research undertaken in this paper is vitally important for helping us and other firms within the industry to improve the way in which we deal with clients and consumers in general.
In terms of what ‘good’ looks like for consumers, the FCA have provided some tips and examples from discussions they have had with firms and advice organisations. From the firms’ perspective, the following is what has been reported to work well:
- A company-wide commitment to ‘doing the right thing’ in this area: changing company process and systems so they are not simply process-driven.
- A culture where staff are encouraged to understand and empathise with vulnerability: many staff in call centres may not have much experience of people in vulnerable circumstances. Building knowledge of various vulnerabilities and encouraging an appreciation of what life can be like for some people in difficult circumstances as well as encouraging a desire to help, is key to instilling the right culture.
- An emphasis on training: all staff who deal directly with customers to know enough about vulnerability to pick up on warning signs or triggers and signpost/refer on appropriately.
- Avoiding rigidly scripted responses: staff need the flexibility to allow a conversation to develop if they sense that a customer may be experiencing difficulty.
Managing the Expectations of All Clients
At Bridge Investments, it’s important that your experience with us and the way in which we communicate with you is simple, clear, fair and not-misleading. If you have gone through a change in your circumstances that you feel makes managing your financial affairs difficult, it is important that you let us know. If you would like advice on helping a member of your family who may be vulnerable, we will be happy to meet or speak with you to see how we can help.
These links may be useful: www.moneyadviceservice.org.uk and www.direct.gov.uk
Twitter users: Martin Lewis of MoneySavingExpert tweets general advice and also answers some personal finance questions- @MartinSLewis and @Moneysavingexpert
The Which? Money team (@WhichMoney) tweet smart money guides.