Industry warned of ‘significant gaps’ in approach to customer vulnerability

Davies has warned that ”significant gaps” still exist in identifying and protecting vulnerable consumers within the insurance and financial sector.

In a statement released yesterday (23 November 2023) the professional services and consulting business said that speakers at a recent summit claimed that many organisations were “still failing” vulnerable consumers.

Held earlier this month (1 November 2023), the Davies Vulnerable Customers Summit brought together figures from across the sector to discuss the treatment of vulnerable customers and what the industry can do to improve standards. 

The event called for better identification of customers through improved use of technology, empowerment and upskilling of staff.

“Despite growing awareness, significant aspects of customer vulnerability are still not being adequately addressed in financial services,” Michael Anderson, vice president of client management at Davies, said.

”We need decisive action from leadership to meet their duties and serve this critical demographic. We must realise that if we get it right for vulnerable customers, we get it right for everybody.”

’Rethink’

This came after research from Watermelon, which was published earlier this year (15 June 2023), revealed that 56% of 3,500 UK consumers of financial products and services would be identified as vulnerable under the Consumer Duty regulations.

The duty, which came into force earlier this year (31 July 2023), requires companies in the sector to ensure that their products provide fair value to customers.

A vulnerable customer – according to the FCA’s guidance for firms on the fair treatment of vulnerable customers – is “someone who, due to their personal circumstances, is especially susceptible to harm – particularly when a firm is not acting with appropriate levels of care”.

Davies’ consulting director Phil Michell said that ”companies need to rethink their customer service strategies”.

”Although, this isn’t just about serving and meeting the needs of such customers,” he added.

”The advantages of such organisational changes and the subsequent realignment of focuses will propagate right throughout, benefiting all customers, employees and stakeholders.”

Helen Lord, chief executive of the Vulnerability Registration Service (VRS), added that customers should be continually assessed.

The VRS aims to provide a centralised database where consumers can register vulnerabilities, in turn allowing companies to identify and assist vulnerable customers. 

”Customers should not just be classified during the initial acquisition phase,” Lord said.

”They should be continually assessed. This may even require the organisation to reassess the original terms and conditions agreement.

”This means businesses can take a proactive approach rather than a reactive one when aiming to meet the needs of their vulnerable customers.”