The FCA announced last week that they’re cracking down on the issuing of high interest loans and investigating caps on rent-to-own costs. Alongside their recent review of consumer debt, this further highlights how protecting those that are most vulnerable in society is top of their agenda.
This is music to UK consumers’ ears with the changes being consulted on predicted to save consumers around £200 million per year. It’s less of a victory for firms, many of whom rely on these charging structures as a form of income.
At times it can be difficult to balance the needs of the business with the needs of the customer. However, in the case of vulnerability, where is it a firm’s duty to protect their customers? Businesses need to be seen to be responding and the customer must always come first. When we work with clients in such businesses, we recommend reviewing and designing new products, services and processes based on customer needs, then overlaying regulatory guidance and business priorities.
So what considerations can businesses take to ensure they firstly protect those that are vulnerable, whilst still delivering business objectives?
- Remember that anybody can be vulnerable, even you. Our survey uncovered that a quarter of adults with an annual household income of less than £20k, (excluding students) would not have enough savings to cover an unexpected bill of £300 and it has also been found that, in any given year, 1 in 4 adults experience at least 1 mental disorder. It could be that a relationship has broken down. A customer might be seriously unwell, could be caring for a friend or family member, or might be completely distracted by becoming a first time parent. Customers may lose their jobs or need to unexpectedly pay for a house repair. Vulnerability has many causes and the impact is often unique
- Be proactive. A business should never be the reason that a customer ends up in a vulnerable situation. For energy firms this could mean that the firm takes time to understand the circumstances around regular missed payments so that they can help in the most appropriate way. This may mean new price plans are negotiated at a lower rate or information about eligible benefits is provided. For financial services firms it may mean proactive warnings are sent to customers informing them that their available balance is low or that unusual account activity associated with mental illness is explored
- Know your customers. If a customer tells you, or are showing signs that they might need help, provide it, and remember if they’ve needed it before. This might mean logging this information (whilst remaining GDPR compliant!) so the next time they speak to you they don’t have to repeat themselves, or you might refer them to a specialist team.
Effective training, a robust operating model and enabling technology are crucial to have in place when providing the right support for vulnerable customers. By balancing this with an understanding of your aspirational maturity for support firms will be able to respond to these challenges in the best way.
We’ll be exploring all of this further in the coming months, through our Vulnerable Customer series, so watch this space.