By Jonathan Barrett, CEO and Co-Founder at Comments
Earlier this year, new guidance was issued by the Financial Conduct Authority (FCA) explaining that it will no longer wait for the Customer Obligation to come into effect before taking action to improve customer vulnerability scores. . Then, a few weeks later, in July, new details of consumer rights were also released by the FCA. The result of these two updates is that businesses now really need to start stepping up and making sure they are better supporting their vulnerable customers. The problem, however, is that are companies really stepping up and taking action right now? This article will argue that customer vulnerability is now a boardroom problem. And will discuss how we can tip the board, both executive and non-executive members, on customer vulnerability.
So far, we’ve seen board discussions in this area focus primarily on customer complaint data, perhaps because it’s more obvious and arguably easier to resolve than financial vulnerability. – it is also more readily available data. In the meantime, the issue of customer vulnerability has remained somewhat confusing and highly subjective for financial institutions to contend with and one they have not traditionally been trained to deal with. And certainly, the nuanced nature of financial vulnerability has made this process very difficult. for personnel in contact with customers. Which has also been exacerbated by the pandemic, especially given the increase in mental health issues we are currently seeing in the UK. So much so that symptoms of depression, anxiety and other potentially debilitating conditions have nearly doubled in the UK during the pandemic.
On a positive front, good progress has been made, including through the deployment of better technologies around identifying vulnerabilities (leading to better data) and the creation of vulnerability task forces at many large financial institutions. . It’s a good start. The challenge remains, however, as there is a great disjuncture between the three main groups that will need to address the issue of customer vulnerability, namely the board of directors, the advocates who lead the work groups on vulnerability or even those who defend the issue and the most operational staff in contact with the client themselves.
If financial vulnerability is to become a fundamental part of a business, and if a board of directors is to be able to make informed decisions about customer vulnerability, then these three parties need to work more closely together and sing from the same hymn sheet. Not only that, but they will also need to incorporate both bottom-up and top-down cultural change around this important topic so that everyone understands its significance.
At the heart of this will be data. All of 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 information to produce accessible, easy-to-use data points for companies to better understand vulnerability, mitigate their business risk and better protect their customers. And not only will better data ensure a more streamlined and robust process across these three key groups, it will also allow for a clear and consistent audit trail to help this company meet its regulatory requirements should the regulator strike.
It is also important to consider questions that non-executive board members might ask. Namely, how can you be sure that you are identifying all vulnerable people, do you understand that your client knows what is required if they are found to be vulnerable, and where is the board report that demonstrate all this? For boards of directors to establish good governance, these three important questions are fundamental.
Now is the time to get the board across on customer vulnerability before it’s too late. There is no possibility of simply delegating this issue to another group, but rather a combined systematic process is required by all parties. This process must be completely data-driven and must also be embedded in the very culture of a company.