Data is the key to helping vulnerable customers

Data is the key to helping vulnerable customers
Data is the key to helping vulnerable customers

Between March and October 2020, at the start of the pandemic, the number of UK adults with ‘characteristics of vulnerability’ increased by 3.7 million to 27.7 million people. In July 2021, the UK Finance COO Forum explored how financial firms have been responding to vulnerable customers and increased attention from regulators.

Key headlines:

  • Between 2017 and 2020, the number of vulnerable customers in the UK decreased, but the pandemic reversed that trend. According to the Financial Conduct Authority’s (FCA) Financial Lives survey, re-run during October 2020, more than half of the UK population is considered ‘vulnerable’.
  • In February 2021, the FCA released its finalised guidance on vulnerable customers, asking firms to focus on four things: understanding the needs of vulnerable customers; the skills and capability of staff; taking practical action; and continuous improvement. They believe data and management information is key to helping vulnerable customers.
  • COOs are developing their approaches to vulnerable customers, but they question whether what they are doing is enough.
  • The regulators are keen to understand how COOs are thinking and drawing conclusions; they appreciate firms won’t get everything right.

    The treatment of vulnerable customers has been on the agenda of regulators for a long time. But the focus has sharpened over the past six years. In 2015, the FCA published an occasional paper that laid strong foundations for the future: it has since developed its approach to supervision and enforcement, and a deeper understanding of customer behaviour.

    The FCA measures vulnerability through its Financial Lives surveys. These explore the impact of health, life events, access to information, and financial resilience – how much people keep in reserve to bounce back. In the period from 2017 to 2020, the number of vulnerable customers in the UK actually went down. These customers accessed more services online, and banks were actively intervening to help people in financial distress.

    But during the Covid-19 pandemic, the number of vulnerable customers began to increase. The most recent Financial Lives survey, which was completed in October 2020, showed that more than half of the UK population was struggling. In February 2021, the FCA published its finalised guidance asking firms to focus on four areas: understanding the needs of vulnerable customers; the skills and capability of staff; taking practical action; and continuous improvement.

    What are firms focussing on?

    According to Stuart O’Sullivan, associate director at Protiviti UK, speaking at the UK Finance COO Forum, the progress of financial firms is mixed. He explained that many have focussed on the skills and capability of staff – ‘vulnerability champions’ are being widely employed in the industry – but he encouraged COOs to help staff continue the work they have started. Firms have also taken proactive action, he added, and cited further examples of businesses contacting elderly, or shielding customers, over the past 18 months.

    But he said firms need to work on understanding vulnerable customers better and making continuous improvements. He asked COOs to consider how they could learn more about the people they serve, and the markets they operate in. This would help them to define the characteristics of vulnerability and put the right policies in place. He also said the FCA was keen to address the quality of management information available; and understand how senior managers ensure vulnerable customers achieve outcomes at least as good as those delivered for other customers. Good data will be important for firms to make the right decisions about vulnerable customers, but in some cases, it’s still lacking. Nearly 50 per cent of boards haven’t yet developed the right metrics on payment deferrals, for example.

    Ultimately, the regulators are keen to understand how COOs are thinking and drawing conclusions; they appreciate firms won’t get everything right.

    Measuring vulnerability behind the scenes

    One COO explained more about her work on the ground. She said the fast-changing situation meant the team had to constantly refresh its approach. It does this by analysing data, including customer transactions, complaints and feedback. Staff also work with a system of ‘red flags’ that help them see if someone is potentially vulnerable. During the pandemic, she said the team set up a ‘check in and chat’ service for customers who were shielding. This kept the risk committee informed, but also helped employees develop their skills. In addition, ten percent of staff have been made ‘vulnerability champions’.

    Another COO said the FCA was also starting to look beyond the identification of vulnerable customers towards wider service measurements. If abandonment rates (when customers fail to complete applications) were high, then how do firms know these people aren’t vulnerable, too? Branches have remained open later during the pandemic for vulnerable customers to book appointments. But ongoing challenges with track and trace, and absence, meant a closer eye was needed on other service measures. The regulators are asking what abandonment rates, and other metrics, are showing or hiding about customers’ lives.

    The path to progress

    Financial firms are making progress on helping vulnerable customers. But the definition of vulnerability is always changing, and they are trying to be flexible and adaptable. During the event, the participants were asked about the main challenges they faced. While many pointed to the issue of management information, the majority said they questioned whether they were doing enough. Most of the COOs at the event believed their approaches to vulnerable customers were developing, and only one said their response was ‘very developed’. There is more work to do, but they have started the journey.

    The next Financial Lives survey from the FCA will shine more light on the number of people struggling, and the depth of the task ahead. But the rest of 2021 presents an interesting opportunity for financial firms to get up to speed. Perhaps, they will always question whether they are doing enough; and whether they have the right data. But as conversations between financial firms and regulators continue, best practice will emerge, and challenges will be brought out into the open and solved. Vulnerable customers might have been on the agenda for many years, but they have moved up the list very quickly in the past 18 months.

    What should firms do now?

    It’s clear that all financial services firms need to respond to the FCA’s finalised guidance, and their approach to vulnerable customers. Protiviti believes they should:

    - Assess their own position in relation to the finalised guidance and identify a programme of activity to address any gaps.

    - Understand and document the characteristics of their target market and customer base.

    - Identify areas where products and services, customer services and communications need to change, to support the needs of vulnerable customers.

    - Ensure staff have the right skills, expertise and empowerment to deliver what vulnerable customers need.

    - Put the right management information and mechanisms in place to monitor how the firm supports vulnerable customers.


    UK Finance’s COO Network event, which was held in association with Protiviti, took place on 6 July 2021 online. For more information and to find out more about the work of UK Finance, contact head of member communities Zoe Bailey.

    For more information on Protiviti’s work on vulnerable customers, please contact Bernadine Reese and Stuart O’Sullivan.


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    Bernadine Reese
    Bernadine Reese
    Managing Director
    +44.20.7024.7589
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