Customer Vulnerability

Do FS firms really care about customer vulnerability?

6 min read

Put Keelan’s shoes on for one minute. Keelan is divorced, with mental health problems and an alcohol addiction. After 35 years in the same job he has been made redundant and the recent pandemic has made it near impossible to find work. If that’s not enough; Keelan is £200,000 in debt and feels strangled by FS firms chasing him for money he cannot pay. Keelan is real and his story can be found in the Financial Lives 2020 Survey which expands on the difficulties he has had and how FS firms failed to make him aware of the customer vulnerability advice and support he could receive.

The impact from the COVID-19 pandemic has pushed many others into debt, especially those who were already struggling. A survey conducted by, found that 25% of people in the UK have incurred debt due to the pandemic. Figures from statista suggest that around 9.4 million UK  jobs were put on furlough in 2020. If this figure is accurate, then the cost of debt due to the Coronavirus Job Retention Scheme (CJRS) amounts to roughly £1,050 per employee that is furloughed. When combined, that means almost £10 billion of personal debt is created from workers who have struggled with reduced income due to furlough. The pandemic has shown that an individual can become vulnerable at any time, and the FCA has encompassed this into a new criteria of risk. This approach identifies vulnerability as those dealing with health issues or life shocks; as well as those who may be sensitive, or absent of financial education. People possessing these characteristics can be misunderstand, and may feel overwhelmed by their contract, benefits or rights.

Here’s why FS companies should care about customer vulnerability – not just for the optics, not just because they have a moral obligation but, if done right, can lead to increased brand awareness, customer loyalty driving repeated sales and reduced job turnover by fulfilled employees happy in their jobs.


Why does customer vulnerability matter?

The FCA has set out Principles for Business, this requires firms to treat customers fairly and to be particularly considerate with vulnerable consumers. When a consumer is vulnerable, they’re more likely to have difficulty in representing their own interests and will have different needs that’ll impact their decision making. Firms have significant work to do to meet the demands of the FCA, these include development in;


Culture and Purpose 

It should be a priority for all financial institutions to ensure their culture aligns with the principles of doing the right thing for vulnerable customers. This should be implemented across all levels of firms from the top Board to customer-facing roles. A bank that has put customer vulnerability first is Starling, a digital bank, who provides “connected cards” so trusted persons can make payments for vulnerable persons. They have also introduced a support scheme for overdraft customers who may struggle to meet repayments.


People and skills 

Firms need to train their employees to have the skills required to identify and deal with customers who are more at risk. This should also be continuously monitored to improve issues fast and effectively. Lloyds banking group have set up a dedicated vulnerability team to offer more support to those who require additional support during the pandemic. This also includes providing guides on how people can best manage their money and avoid fraud. 


Consumers’ needs

There needs to be a better understanding of the needs of consumers and outreach to provide information that can be easily understood. Products and services should be better designed and communication strategies should be better implemented to align with these goals. 


Some may think investing in customer vulnerability is just a drain on profits and will not add any value. The answer is quite the opposite. From the Financial Lives 2020 Survey we see that 40% of those with health problems say that they lack trust in FS firms. Similar figures are found for other vulnerable consumers with 36% for those of limited financial acumen. Therefore, investing in vulnerability would improve customer trust and loyalty, drive revenue, and give a competitive edge to those firms that genuinely care for vulnerable consumers. 


The FS industry can also benefit from proactive measures against risk rather than reactive measures to issues that arise. The FCA regulates and enforces against the principles that it outlines for businesses. With regard to vulnerability, they state that firms need “adequate processes and control systems in place to ensure the firm is managing the risk of harm to vulnerable customers”.  In December 2020 a bank was charged £26 million for the unfair treatment of customers in financial difficulty. The specific problem was their failure to follow customer contact policies with proper conversations to understand why customers were in debt, and what could be done to help them. Since then they have been redressing these issues paying a further £273 million to over 1.5 million customers. Regulation on treating customers well is not just talk but real measures are taken by authorities to maintain customers wellbeing. 


The importance of identifying vulnerable customers for financial institutions 

Protecting the most vulnerable people in the community not only falls on the Government, but also on businesses they interact with – especially those who operate in financial services. This is because vulnerable individuals may have a lower understanding of their financial rights and the products available. They may also be less able to access digital channels to interact, communicate or transact with firms. They may be less likely to interact with the latest communications regarding their financial contracts especially if it means dealing with customer services. From the Financial Lives 2020 Survey,  32% of vulnerable adults said that they find telephone customer services difficult and confusing; and 23% saying they put off these interactions. Therefore, organisations must consider how they reach out to customers of different vulnerabilities, and how they can best translate what they offer to provide the best outcome  for consumers.


Good customer service increases brand loyalty and gives a competitive edge. Which? research finds that banks have the best customer service in the UK with Nationwide receiving the second best score overall of 83%. For FS firms to stay competitive they must continue to invest in customer service. A PwC survey finds that a third of people will stop using a company they love after just one bad experience. It also finds that 65% say great customer service is more effective than advertising. As we can see FS firms need to continue to invest and keep customer service as a top priority or they shall fall behind their competitors losing customers and future sales.


What do firms need to do? 

With the current pandemic triggering a fresh economic crisis it is paramount that firms reevaluate their culture and processes, to produce a system that cares for those vulnerable members of society. To do this the FCA has encouraged a four fold system that follows as; understanding needs, identifying vulnerable customers, responding by providing for those needs, and monitoring these customers and the implemented processes supporting them. These can be addressed by implementing speech analytics tools to operations so as to automate certain processes such as standard forms, change of address and fact find. This will save agents a massive amount of time, allowing them to focus on a higher value of activity, making sure customers receive the best possible service. 



Keelan is not an isolated case. Unemployment is at a 5 year high of 5% and economists estimate it shall rise to 6.5% (2.2 million) by the end of the year. The death toll has increased 14% on average in England and Wales. Leading law firm Stewarts has experienced a 122% spike in divorce claims. A StepChange survey found 14 million people have been negatively affected financially by covid with 30% (4.2 million) showing 1 or more signs of financial distress. Now more than ever with clear indications of rising vulnerability, financial institutions should look towards the future communicating with customers to provide support and understanding of their finances. The FS industry must continue evaluating and innovating current practises, so as to best help customers and avoid inefficiencies that don’t provide benefit to either the customer or themselves.


Learn how we use speech analytics platforms to monitor and alert teams to high effort incidences. Visit Aveni Detect 

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