Vulnerable Customers: Post-Pandemic Pressure

At the end of June 2021, national debt in the UK reached £2.2 trillion – the highest debt-to-GDP ratio (102.5%) that the country has seen since 1961. Amongst individual consumers, FCA statistics suggest that roughly 20 million people have seen their financial situation worsen across that same time period, with 9.9 million seeing an increase in unsecured debt.

Debt levels have rapidly accelerated over the last 16 months because of the global Covid-19 Coronavirus pandemic, its knock-on effects on the economy and individual’s finances and the government’s expensive support measures created to help both businesses and households to survive the crisis.

The new FCA Business Plan identifies 14.2 million adults in the UK who have “low financial resilience” – an increase of 27% between March and October 2020. Vulnerable customers have been a key focus area for the FCA already this year, and the new business plan makes it clear this will continue to be hugely important. FCA plans include a commitment to launch a 5-year campaign informing and educating customers about high-risk investments, hoping to increase consumer understanding about what is and is not protected by the regulator. Plans also include a consultation on changes that look to strengthen the rules around financial promotions and the upcoming publication of the FCA report on Consumer Investments Strategy.

The Business Plan states that the FCA will be “monitoring how firms support customers in financial difficulty and take action where needed” and that they “will also carry out an in-depth assessment of whether consumers are getting fair and appropriate outcomes and use these findings to shape [the FCA’s] next steps”.

What does this mean for Financial Services businesses? There’s been an industry-wide increase in awareness around vulnerable customers over the last year and it will continue to be crucial for every organisation to have a thoroughly considered vulnerable customer strategy. But it’s not enough to simply write up a set of policies that sound good – organisations are going to need to make sure they’re continually measuring how and how effectively they’re serving their vulnerable customers. Staff on the front line of customer contact will need to be trained, knowledgeable and sensitive to ensure the business is putting vulnerable customer awareness into practice every day, at every stage of the customer journey.

For businesses that have previously not had many vulnerable customers, the huge increase in the number of vulnerable consumers can be daunting. Kind Consultancy can help. We work with a number of specialist vulnerability practitioners who can join your business on a contract basis, helping to design and embed frameworks, delivering game-changing training to staff and taking a hands-on approach to complex cases. We’ve seen an unprecedented rise in demand for vulnerability expertise over the last 12 months and a recognition that this could be the next crucial area for avoiding regulatory investigations and fines.

We work with vulnerability experts who understand the multi-level approach needed to make a firm compliant with FCA requirements, and to go beyond that, helping businesses to become exemplary in their treatment of vulnerable customers. Ensuring individual staff who are interacting with customers have a good understanding of how to handle vulnerable customers is an end product that needs to begin with creating a company-wide culture of respect and understanding for vulnerable customers and their needs. We have access to specialists at every level, including senior vulnerability consultants who can help with these big-picture ground-up rethinks of how a business approaches vulnerability. From there they can lead or assist in designing and embedding new policies and procedures, ensuring compliance and understanding at every level of the business. They can also play a key role in measuring the effectiveness of your vulnerability policies, new or pre-existing, and ensure that the structures and plans put in place are actually delivering positive benefits to your vulnerable customers consistently. As with all of Kind Consultancy’s interim and contract work, we will always tailor our approach to the specific needs of your business, taking into account the size, the type of products, the relevant regulations, the location, long term business plans and so much more.

Contact us today on or 01216432100 for a confidential discussion of how Kind can provide you with vulnerability talent, and how investing in vulnerability awareness today can save your organisation tomorrow.

Selena Tye

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