Customers and Vulnerability 🤝

Protecting vulnerable customers

Customers, especially those that are vulnerable, should be central to everything firms do, especially in these uncertain times when circumstances can rapidly change, causing unforeseen vulnerabilities. A vulnerable customer is defined 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.

The right protection

Ensuring consumers have an appropriate degree of protection is key and all regulated firms are expected to set in practice activities, oversight, and measurements, to ensure consumers are protected.

Firms need to ensure the risk of harm is mitigated, respond to where it arises (or could arise), and take responsibility through its culture, employees, and practices, to ensure consumers are able to access products, services, and information enabling them to make informed assessments and decisions.

Vulnerable consumers should experience outcomes as good as those for other consumers and receive consistently fair treatment.

Customers will have many characteristics and these can change over time, with vulnerability also evolving across the span of a relationship. It’s therefore imperative for firms to consider many scenarios and traits, embedding how to support customers as needs change. 

Training staff to recognise vulnerability and making it simple for them to engage, offer support, and deliver outcomes is a vital component of good practice for firms.

Robust governance and outcomes

Processes and procedures should detail the manner in which good outcomes are achieved and the risk of harm should be assessed to indicate areas of risk, risk mitigation, and key risk indicators. 

These should measure the effect and basis of good outcomes being delivered consistently across the entire customer journey and should also take into account as many examples of potential harm or vulnerability as possible with evidence to demonstrate how the firm has mitigated the risk of harm.

High expectations from the regulator

The FCA guidance describes the expectation for firms to produce and regularly review management information (MI) that supports the way in which they are delivering positive outcomes for vulnerable customers – this can be read in full here

The FCA expects firms to provide their customers with a level of care that is appropriate given the characteristics of the customers themselves and this may be different for vulnerable customers, so firms should take particular care to ensure fair treatment is delivered.

Firms should be able to produce, and regularly review, MI on the outcomes they’re delivering for customers, including those in vulnerable circumstances. 

The FCA guidance includes examples of the types of MI that a firm may want to collect, including: 

• Customer feedback 
• Behavioural insights 
• Feedback from specialist support services 

Leaders; culture and accountability

In a healthy business with strong customer focus, commitment comes from the top – but importantly is supported by empowered and knowledgeable staff. Customer and vulnerability focus should transcend the organisation, with staff able to champion customers, with a culture woven into demonstrable practices and measurable outcomes.

Accountability and tone from the top, penetrating all layers of an organisation helps to ensure the firm operates in a coherent and consistent manner, particularly where teams are trained appropriately to understand the expected impacts of poor customer outcomes.

Senior leaders should be actively involved, accountable, and invested in how they and the firm meet their responsibilities. They should demonstrate how the firm behaves across all business areas to ensure consistently fair outcomes throughout the firm, but importantly all employees should be engaged, empowered, and clear on their role and responsibilities to deliver positive customer outcomes and ideally this should be measured and visible to demonstrate good practice.

Putting it into practice

Firms should consider how they consistently deliver end-to-end activities that focus on the following areas:

• Target Market: Understand the needs of their target market / customer base.
• Expertise and Awareness: Ensure staff have the right skills and capabilities to recognise and respond to the needs of all customers, especially vulnerable customers.
• Design and Communication: Flexible product and service design with clear communications, delivery methods, and delivery channels.
• Oversight and Governance: Monitoring and assessing whether they are meeting and responding to the needs of customers with characteristics of vulnerability.
• Evaluate: Enhance any areas identified where improvement can be made and consistently challenge their practices to achieve higher standards and outcomes.

Firms should ensure they have appropriately designed solutions that enable them to monitor, evaluate, and act on indications of any weakness in their control environment.

Management information is a good source of intelligence, but it must be designed correctly and be supported by clear indicators and metrics to quickly highlight impacts and deliver consistent appropriate outcomes for customers.

Controls must be embedded to align to and mitigate risk of harm and evidence of those controls operating and reducing any risk impacts from occurring is paramount in a resilient and robust operating model.

It’s vital that firms capture and monitor accurate MI, supported by attestations, evidence ,and governance to give assurance that customers are being treated fairly. Such MI should cover products and processes that are working appropriately and delivering the positive outcomes envisaged.

Any areas of weakness, focus, or improvements needed, should be delivered in a controlled manner and demonstrate the maturity and capabilities enhancement as a result of the changes made.

Fair treatment of customers and vulnerabilities should be underpinned by high quality management information from all touchpoints across the organisation and shared with the appropriate committees, boards, and management teams in order to ensure responses and action can be directed to achieve the firms’ obligations.

• Produce MI: This should capture outcomes for customers, including vulnerable customers, and make sure it is discussed regularly at an appropriate level, and escalated and acted on as necessary. 
• Customer Advocacy: Analysis of customer satisfaction and retention records – e.g. claims, cancellations, transfers, complaints, and outcome/service monitoring.
• Pricing, Fees, and Charges: Review of fair pricing and application of fees at onset, over time, and in perpetuity – analysis of any customers or cohorts where characteristics could result in degradation of fair pricing. 
• Communications: Compliant, clear, and simple communications (including financial promotions) that ensure customers fully understand the products, fees, and services and their options and can make informed decisions quickly about their needs.
• Customer and Vulnerable Customer Support Teams: These should ensure customer champions and channels are empowered to  add additional support across the entire customer journey – delivered with expertise and empathy from staff who are trained appropriately.
• Training and Competence: Set standards, translate them to practices and controls to ensure consistent delivery to the capabilities of the organisation to support customers and add additional support for vulnerabilities.
• Self-Assessment: Ensure there are ways to identify customer journeys, key touchpoints, controls and processes and review the outcomes retrospectively to ensure indicators of any weakness or focus areas can be addressed and enhanced to raise the bar.
• Root Cause Analysis: Use all MI, feedback, complaints, outcome data, risk events, incidents, breaches etc to formulate an impact assessment of the firm’s risk of harm and structure compliance assurance reviews to challenge the outcomes and focus on making the firm more resilient in relation to providing positive customer outcomes, including where vulnerabilities exist.

Grath has customer excellence built in

Grath can assist firms to embed a purpose-built, intuitive and cost-effective solution, delivering automated governance and a flexible risk and controls suite (GRC) and attestations, underpinned with purpose-built MI and reporting, auditable evidence, and incident management tools.

Alongside this, for maturity enhancement and compliance assurance management and workflow, our platform will revolutionise how your business embeds consumer duty and customer focus.

All of this will ensure you can tangibly demonstrate positive customer outcomes and consistent oversight, elevating your business to the next level in GRC capability.

Want to do more for vulnerable customers in 2023?

If you’d like to know how Grath’s technology can help you put customers in focus this year, then we’d love to talk.

Get in touch with us at Grath | Reinventing Regulatory Compliance