Managing vulnerability well to establish trust and loyalty

By Paul Dyer, Head of Regulatory Risk and Assurance at Huntswood

The Financial Conduct Authority’s (FCA) Financial Lives research indicates an estimated 24 million people in the UK display one or more characteristics of what would be considered vulnerability. There are a number of contributing factors to determining vulnerability in this context, including indicators such as physical or mental health issues, a lack of financial resilience, or life events such as bereavement and redundancy.

The challenge that a number of firms may face relates to the identification of truly vulnerable customers and in turn, how to provide them with the support needed in light of their circumstances. The FCA has published draft guidance in an effort to support UK firms with these challenges and improve their ability to better serve vulnerable customers.

In an unstable economic climate such as the one we are trying to contend with at the present time, the resilience of households to impacts affecting their financial stability may be lower than before. Combining that with the fast-changing conditions makes identifying those who are vulnerable, or at risk of vulnerability, even more difficult.

It then begs the question; what can firms do to ensure they are working to provide the best outcome for their vulnerable customers whilst also ensuring they do not find themselves under scrutiny?

Identifying vulnerability

Huntswood’s Complaints Outlook 2019 report found that most firms are moving towards an ‘individual circumstances’ model of identification over persisting with a broader ‘categorisation’.  Despite firms appearing to be moving in the right direction with changes to their models of assessment for vulnerability, there remains some degree of difficulty. Identifying vulnerability continues to be an ever-evolving process, mainly due to the unpredictable nature of its drivers, which can cause customers to suddenly find themselves in a challenging position.

It is crucial that firms are sensitive to these changes and able to respond quickly and appropriately in identifying these customers and equally with providing any extra support needed. This appears to be a manageable task if the right controls and processes are put in place to monitor for signs that someone’s circumstances may be in flux.

The Financial Lives data noted that over a third of people considered vulnerable will identify with two or more of these drivers of vulnerability at any one time. Monitoring data sources such as payslips, bank statements and credit reference data will assist firms in recognising these indicators from the outset.

Upskilling staff to respond to customer needs

It makes sense that tailored and empathetic customer service should be considered by firms. Placing an emphasis on training for front-line staff in spotting warning signs, and in building processes to allow them to take appropriate and proactive action is pivotal to better outcomes.

Given the complexity of the task it is not surprising that research conducted by the FCA suggests that vulnerability may be instigated or exacerbated by the actions or processes of firms. Case studies from the Financial Lives survey highlighted that personal interactions had a significant impact on how customers felt about their financial situation.

Research findings such as this are a critical reminder that call and complaint handlers, often the first point of contact for customers, require excellent interpersonal skills. Showing empathy and understanding is an important first step to building a positive relationship with vulnerable customers. Moreover, it is important that frontline staff understand how to manage potentially distressing information with clarity and sensitivity, while having the confidence to know how and when they should escalate issues to more senior team members.

Creating an omni-channel experience

Maintaining consistency in a customer contact experience, which lends itself to best outcomes and high standards across all communications channels, is challenging. Huntswood’s data shows that 70% of customers whose complaints were not resolved at first point of contact interacted with their provider through at least two channels of communication during their complaints journey.

As new channels of interaction are developed to keep pace with technology and customer preference, it is important to maintain consistency of service. The first step may be to join up data points across all channels. This gives firms a holistic view of each customer, including information from previous contacts regardless of the channel through which they were made. This should allow for improved identification of vulnerability, faster resolution times and better outcomes for customers. It may also allow the firm to take a more holistic view of their own digital conduct.

Operational resilience

Excellence must be maintained to prevent vulnerable customers from slipping through the net. During periods of crisis the number of customers experiencing vulnerability rises. At the same time customer service teams taking those calls experience increased pressure from higher volumes of contacts and longer call times.

To ensure consistency of better outcomes whilst managing all the challenges noted here, it is imperative to ensure that any third-party resource partners used by firms provide the same high levels of specialist customer service as the firm they are working with. It is vital that they are able to integrate with your operation, seamlessly adopting your values and principles to deliver the best results. The right partner should work to enhance your current operation by upskilling existing staff and contributing to best practice.

The FCA guidelines are clear that improving customer communications is key to both identifying and managing vulnerability. In the current climate, firms that are able to identify vulnerability early and support their customers will not only exceed the regulator’s expectations, they will also build long lasting trust and loyalty.