Financial Services customers are now more vulnerable than ever before

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The number of financial services customers that could be classed as ‘vulnerable’ increased 15% over the initial months of the Covid-19 pandemic in the UK and now stands at 27.7 million, a recent survey by the Financial Conduct Authority (FCA) has found.

The FCA undertook two surveys in 2020, and found the number of customers displaying characteristics of vulnerability in UK financial services – from those who have physical and mental health issues, to others showing signs of being affected by life events such as bereavement, or with low financial resilience – rose by 3.7m adults over that period from 24m adults according to the first survey.

Jonathan Cavill of Pinsent Masons, the law firm behind Out-Law, who specialises in financial regulation concerning vulnerable customers, said the findings of the survey “set out a stark reality of how Covid-19 has negatively impacted individuals with respect to financial resilience, vulnerabilities such as mental health and customer interaction with the financial services sector generally”.

It is likely that the financial consequences of Covid-19 on customers will remain for a number of years and firms will continue to develop improvements to help those who need it most. Cavill continues: “We have seen the industry in many places rising to the challenge to help customers during this challenging time – for example, taking steps to ease financial hardship and making changes to account for lockdown measures and the strain on mental health. Similarly, there are issues regarding customer vulnerability which exist independently of Covid-19 and those will need to be continually addressed and improved upon to ensure the fair treatment of vulnerable customers”

Nisha Arora, director of consumer and retail policy at the FCA, said: “While there are some positives reported in the data, many of the findings are worrying. Since the start of the pandemic, the number of people experiencing low financial resilience or negative life events has grown [from 10.7 million to 14.2 million]. The pain is not being shared equally, with a higher than average proportion of younger and BAME adults becoming vulnerable since the start of the COVID pandemic. It is likely the picture will have got worse since we conducted the survey.”

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According to the FCA survey findings, a growing number of financial services customers in the UK are reporting mental health issues. The regulator said 18% of respondents said they had a mental health condition or illness in its October 2020 survey, up from 12% in the February survey. A sizeable minority of those customers (43%) were adults aged between 18 and 34 years.

Traditionally, a ‘Vulnerable Customer’ was tagged on the company’s database as mainly having physical or mental health difficulties that made them vulnerable to deal with – especially by phone, although VC policy has improved dramatically across the business spectrum in recent years – and not just within the financial services industry.

Having recently attended a very interesting webinar hosted by speech analytic experts CallMiner, I was really impressed with the work that both Vanquis Bank and British Gas are doing to more sensitively and effectively manage the vulnerable customer experience. They too have seen a significant increase in the number of customers who identify as ‘vulnerable’, based on the criteria set out in the FCA guide to Treating Customers Fairly.

With an additional 4 million people becoming ‘vulnerable’ as a direct result of the pandemic, both Vanquis and British Gas have taken considerable steps to upskill their frontline staff to both recognise and manage the vulnerable customer, in order to improve their experience – and naturally, there is still some way to go before we will see CSAT scores of VCs up there with the rest.

In the meantime, and aside from the brilliant work that the Samaritans and Mind do to support businesses in this incredibly important arena, Bristol University have been supporting Vanquis frontline staff with training in handling the sensitive topic of debt collection, which is often magnified when a customer is identified as ‘vulnerable.’  They’ve produced a super useful guide “Vulnerability: A Guide for debt Collection – 21 Questions, 21 Steps” which you can download from their website.

So, the lesson for every frontline operation right now, across the business spectrum, is to treat EVERY customer, regardless of their level of vulnerability (and whether that vulnerability is implied or explicit), with due care, consideration and respect – mindful that EVERYONE, in both business and life, has been impacted to one degree or another by events of the last 18 months.

The ability to build rapport, empathy and trust with your customer has never been a more important skill to develop. People ‘buy’ people FIRST and our people are the vital ingredient in our recipe of success, when it comes to Treating Customers Fairly and ensuring a positive and memorable experience, when they are interacting (whatever the modality) with our Brand Ambassadors.

Testing for EQ (rather than IQ) during the recruitment process has also never been more important, given that our ability to be in-tune with others, talking their language, communicating on the same ‘wavelength’ is a critical skill (an art-form even) which will guarantee that positive, memorable customer experience.

Emotional Intelligence is the new kid on the block in business – and we’d all do well to ‘Sharpen The Saw’ if we’re going to continue to do everything we can to show up and stand out from others in our field, by ensuring our frontline staff can easily build rapport, empathy and trust with EVERY customer EVERY time and treat EVERY Customer Fairly, in order to get to the win-win.

Want to know how emotionally intelligent YOU are? You can take the EQ test right here: https://firstimpression.training/EQQuestionnaire

Hello... I'm Marie Cross

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