By: 13 May 2024
Meeting the needs of vulnerable customers beyond the financial

Phil Michell, consulting director, Davies.

Since 2021, two significant events have brought heightened attention to vulnerable customers. The first was the ongoing cost-of-living crisis; the second was the implementation of the FCA’s consumer duty in July 2023.

The Financial Conduct Authority (FCA) defines a vulnerable customer as “someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care”.

According to the CII, the UK’s ageing population, widespread low financial literacy, and growing digital divide mean that vulnerable customers are an increasing issue, placing a duty on the insurance industry to recognise and address these vulnerabilities

Consumer duty has intervened to ensure that UK Financial Services providers, including insurers, are more effectively identifying and serving vulnerable customers. While progress has undoubtedly been made, there is still more to be done, not least as the scope of consumer duty broadens.


Support for those in need

In July 2023, coinciding with the implementation of the consumer duty, the FCA undertook a comprehensive review of firms’ product journeys. This review aimed to identify gaps in the identification of vulnerable customers, and the findings shed light on areas where firms needed to improve their practices to serve them better.

The open “Dear CEO” letters the FCA dispatched to wealth management and stockbroking firms following the review further emphasised the obligations these firms have towards vulnerable customers and signalled a shift towards more proactive supervision.

Now, a year on, consumer duty regulations have been extended to apply to closed products. By including closed products, the FCA aims to ensure vulnerable customers receive adequate protection and support across all facets of their financial interactions.

Crucially, the regulation extends beyond ensuring the financial security of vulnerable customers and includes focusing on improving the accessibility and user experience of essential services for all customers. This approach is exemplary, as service providers should look not to offer the bare minimum but to deliver the best possible products and services for customers, no matter their circumstances.


Looking beyond the money

The actions of the FCA in the past year have set a positive precedent for the identification and care of vulnerable customers, not just in terms of tackling financial vulnerability, but also in terms of promoting inclusive practices and ensuring greater accessibility.

Organisations are beginning to recognise the moral and commercial value of accessibility, implementing analysis to better identify those in need and improving the availability of their services. Many are partnering with organisations such as AbilityNet or the Good Things Foundation to build more inclusive digital products.

Building customer experiences with accessibility as a guiding principle can be beneficial not just for the vulnerable, but for all users. Starting from inclusive design principles can lead to a more user-friendly experience for all, boosting the overall usability of the service and enhancing customer satisfaction, which will not only benefit customers but also drive improved operational efficiencies and reduced costs.


On the path to inclusion

Thanks to the ongoing efforts of the FCA and its consumer duty, organisations and service providers are making progress in their efforts to identify and support vulnerable customers, placing significant emphasis on inclusive design and customer empathy. Technology solutions such as interaction analytics are already proving priceless in generating accelerated insight and identification of the effects of vulnerability on specific customers.

However, while technology undoubtedly plays a crucial role in this endeavour, the fundamental principles of delivering great customer experiences remain essential. No matter their sector or the perceived requirements of their customer segment, every business has an obligation to continually improve and self-assess to ensure the best possible outcome for each and every customer.


Image: Provided by Davies/ Canva
Guest Post
This post was created just for Claims Media by a guest contributor.