Consumer vulnerability in the UK is a subject which has received a great deal of attention over the last few years. It's especially important in times of disruption or change.
The financial services sector, in particular, took a front-line approach when the FCA announced its paper on this subject back in early 2015. But it’s by no means the only regulator focusing on this issue.
Energy companies continue to receive a lot of focus from their regulator, Ofgem, about the way in which they treat their customers who might be vulnerable or showing signs of vulnerability. Its latest report shows that there’s still more work for the industry to do in terms of helping out those customers who are either building up levels of debt, or who are starting to repay excessive debts. This is a particular area for energy customers where vulnerability is exposed, but it’s by no means the only one.
So, before going any further, two questions need to be asked. Firstly, what exactly is vulnerability, and secondly, why should it matter?
The surprising definition
The work carried out by the FCA, and in particular its collaboration with other bodies across the industry and the non-profit sector, has been pivotal in pushing the understanding of vulnerability to a whole new level.
The regulator has proposed a definition of vulnerability, as the situation when a consumer finds his or herself in a position where they’re susceptible to detriment, by either making inappropriate decisions, or being led into positions which aren’t beneficial to them, due to a lack of care by service providers.
There are therefore two important aspects which businesses need to take note of:
- Consumers may come to them in a state of vulnerability; and
- Businesses can make this worse - or better.
It’s the latter point in particular that needs to be understood – the reaction of businesses when faced with a vulnerable customer can make all the difference, depending on how they handle that customer.
But first, vulnerability needs explaining a bit more.
Different types of vulnerability
The FCA paper is very good at setting out the different ways in which vulnerability can manifest itself. And the results are surprising.
First of all, businesses need to understand the short-term nature of vulnerability in many cases. Someone who’s just had a bad accident and is in the process of recovering; someone going through a painful divorce; a person who’s grieving the loss of a loved one; the parent who’s just lost their job and is worried about how they’re going to provide for their family. These people may not display symptoms of vulnerability all the time; but because of these particular events, they’re doing so at that time.
Then there are those who are vulnerable for a long-term and often permanent reason. Disability, both physical and mental is the obvious one here, but there are also those who’ve become long-term carers, or who have had to take responsibility for someone’s personal affairs; through a Power of Attorney, for example. Both these situations put pressure on people, making them potentially vulnerable, under the strain of caring for someone else.
Then we have those who, for whatever reason, may not have a standard of education high enough to enable them to understand the types of products or services that would be best suited to them. This is a particular issue in financial services, where products are complex by nature, but competition in the energy market, with different tariffs and plans, shows that more choices are available to people now than in the past. This has the potential to cause confusion and a level of complexity many simply can’t understand.
Which is where you come in.
How to respond is crucial
The focus from regulatory bodies on this subject is closer and more intense now than ever before. Customers who demonstrate a degree of vulnerability have to be looked after. They have as much right to be treated with respect, and not to be taken advantage of, as any other customer.
Businesses now have no choice but to demonstrate they can identify the signs of vulnerability, and respond in an appropriate and sympathetic manner. Failure to do so could result in not only a loss of reputation, but unwanted focus from regulators too.
So, what can your business do?
Start on the front line
The most important thing you can do is to ensure that you have a policy for dealing with vulnerable customers, that it aims to achieve the right outcomes for these customers, and that it’s understood by everyone in the organisation.
The next step, and arguably the most important one, is making sure everyone is trained to handle vulnerable customers in a way consistent with this policy.
For instance, when dealing with a customer who is angry, is the person taking the call able to understand that there may be a vulnerability which is driving that anger? Perhaps it’s borne of frustration, of not understanding the situation. It could be borne of a stressful event, or maybe someone has a disability which impairs their ability to express him or herself clearly.
All of these factors need to be taken into account, in what is a complex area. But it’s the ability to empathise with the customer, to not jump to conclusions about their situation, and to have the knowledge and understanding of different vulnerability scenarios, that will ensure your business’ reputation is enhanced, as opposed to being damaged, by doing the right thing for those in our society who need help the most.
Vulnerable Customers Checklist
- Do you have a policy on consumer vulnerability? (Yes/No)
- Have you identified the most likely areas where vulnerability could be displayed by your customers? (Yes/No)
- Do your customer service staff understand the different types of vulnerability? (Yes/No)
- Have you conducted a review of how you’ve handled vulnerable customers in the past? (Yes/No)
- Have you identified different types of vulnerability through your customer complaints? (Yes/No)
- Are you able to identify individual customers who are vulnerable, so they can be treated appropriately in future? (Yes/No);
- Have your customer-facing staff received training in how to handle vulnerable customers? (Yes/No)
If the majority of your answers to these questions is no, it’s likely you’ll need to do some work in order to make sure you’re meeting both the public and regulators’ expectations for dealing with vulnerability, which will have been heightened by the increased level of awareness of the topic.
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