Regulator says vulnerable customers aren’t being treated fairly, with rigid ‘computer says no’ policies in place at some financial firms.
The Financial Conduct Authority (FCA) has ordered financial firms to do more to help vulnerable customers, after seeing evidence that they are being treated poorly.
The regulator is worried that too many consumer protection policies are built around a ‘typical’ customer, making them ill-equipped to deal with non-standard situations.
For vulnerable people in difficult circumstances, struggling with a complex telephone menu system or being met with a ‘computer says no’ response exacerbates already stressful conditions.
In a discussion paper the FCA said: "Financial services need to be able to adapt to the changing circumstances that real life throws at people, rather than being designed for the mythical perfect customer who never experiences difficulty."
It’s calling on firms to formulate more inclusive policies which may involve training frontline staff better and creating specialist teams with the power to make flexible tailor-made decisions.
Vulnerable customers
The FCA’s research highlighted figures which show the increasing importance for vulnerability strategies to be developed by financial firms:
- 800,000 people in the UK are now living with dementia, which is expected to double over the next 40 years
- The number of people aged over 85 is over 1.4 million. This is predicted to double in the next 20 years
- Almost half of UK adults do not have enough savings to cover an unexpected bill of £300 or more
- One in seven adults has the literacy skills of a child aged 11 or below and just under half of adults have a numeracy skills of an 11-year-old or below
- Of the 7.1 million UK adults that have never used the internet, 3.7 million were disabled and 3.1 million were over 75 years of age
- By 2020 half of the population can expect to be diagnosed with cancer at some point in their lives
- In any given year one in four adults experiences at least one mental disorder.
The regulator warned that though many people did not consider themselves to be vulnerable, anyone could become vulnerable for a range of reasons.
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What’s going wrong?
[SPOTLIGHT]Campaign groups have reported that people in difficult circumstances struggle with the rigid policies in place with some financial firms, which aggravate already stressful situations.
In one example a cancer patient told the FCA that they got in touch with their bank to discuss a temporary loss of income, but instead of being told their options, were told to call back when their accounts were in arrears.
In another brought to the FCA’s attention a carer who held legal Power of Attorney reported she had been refused to be served by a cashier and another staff member refused to accept her blind mother’s signature.
The FCA’s research identified the main problem areas in the treatment of vulnerable customers were:
- Some financial services products and systems can't cope with non-standard needs
- The response of frontline staff both on a helpline or in branch is crucial to customers’ experience and outcomes
- Frontline staff do not need to be experts but they need to know where internal expertise lie and when to refer people on
- Most problems relate to poor interaction or systems
- Some customers are overwhelmed by complex information and find it hard to distinguish between marketing and important product messages
- In some firms there is inaccurate or overzealous approach to the rules, such as those around data protection or affordability, preventing firms meeting the needs of vulnerable consumers.
The regulator wants firms to get to a position where frontline staff can recognise signs of potential vulnerability so they can more easily refer people for specialist support where appropriate.
Making a change
The FCA wants its discussion paper to open up debate and lead to the first steps where the regulator and industry work together to tackle the issue.
The paper includes a Practitioners’ Pack, which comes with examples of firms that have displayed good practice when dealing with vulnerable customers. The FCA is challenging firms to take a look at its current policies and consider a more consistent approach embedded across all operations.
It suggests firms make staff aware of policies, be more flexible in the application of terms and conditions of products and services, develop processes for referring customers to specialist teams and keep evaluating processes to ensure they are operating well.
Martin Wheatley, chief executive of the FCA said: “Whether it is accessing funds or securing a repayment holiday, we will work collaboratively with firms to identify what inclusive policies could look like and how best we can create the right outcomes for those consumers. It’s a challenge for regulators and firms alike.”
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