By Jonathan Barrett, CEO and Co-Founder at Comentis

Earlier this year new guidance was issued by the Financial Conduct Authority (FCA) explaining that it will no longer wait for Customer Duty to take effect before taking action to improve customer outcomes when it comes to vulnerability. Then just a couple of weeks later in July, new Consumer Duty detail was released by the FCA too. The result of these two updates is that firms now need to really start to step up and make sure they are better supporting their vulnerable clients. The issue is though, are firms really stepping up and taking action right now? This piece will contend that customer vulnerability is now a boardroom issue. And will discuss how can we switch the board, both executive and non-executive members onto customer vulnerability.

Up until now, we have seen boardroom discussion in this area focus predominantly on customer complaints data, perhaps because it’s more obvious and arguably easier to solve than financial vulnerability- it is also more readily available data. In the meantime, the issue of customer vulnerability has remained somewhat a confusing and highly subjective issue for financial institutions to combat and one which they haven’t traditionally been trained in. And certainly, the nuanced nature of financial vulnerability has made this process very difficult for customer facing staff. Which has been further exacerbated by the pandemic too, not least given the rising levels of mental health issues we are currently witnessing in the UK. So much so in fact that symptoms of depression, anxiety and other potentially debilitating conditions have almost doubled in the UK during the pandemic.

On a positive front, some good progress has been made, not least due to better tech being deployed around vulnerability identification (leading to better data) and vulnerability working groups being set up in many larger financial institutions. This is a good start. The challenge remains however, in that there is a large disjoint between the three main groups that will need to tackle the issue of customer vulnerability, namely the board, the advocates leading the vulnerability working groups or indeed those who are championing the issue and the more operational customer facing staff themselves.

If financial vulnerability is to become a fundamental part of a business, and if a board is going to be able to make informed decisions on customer vulnerability, then all three of these parties need to work more closely together and sing from the same hymn sheet. Not only this, but they will also need to embed cultural change from both the bottom up and indeed the top down around this important topic so that everyone understands it’s significance.

Central to this will be data. All these groups need better reporting, greater visibility, and more robust processes around customer vulnerability. Cutting-edge technology can help with this and will need to combine both digital and clinical insight to produce accessible and easy-to-use data points for businesses to better understand vulnerability, mitigate their business risks and better protect their clients. And not only will better data ensure a more streamlined and robust process across these three key groups, but it will also allow for a clear and consistent audit trail to assist that business in its regulatory requirements should the regulator come knocking.

It’s also important to consider what questions non-executive board members might ask. Namely, how can you be sure you are identifying everyone in vulnerable circumstances, do you understand your client to know what is required if they are found to be vulnerable and where is the board report that will demonstrate this all? In order for boards to establish good governance, these three powerful questions are fundamental.

Now is the time to switch the board onto the topic of customer vulnerability before it becomes too late. There’s no scope to simply delegate this issue to another group, but rather a combined systematic process is required by all parties. This process should be wholly reliant on data and should be ingrained into the very culture of a company too.