The Financial Conduct Authority (FCA) has revealed that less than half of customers facing personal challenges have disclosed their situations to financial service providers. This reluctance is linked to negative experiences, with 44% of vulnerable individuals reporting dissatisfaction compared to 33% of non-vulnerable customers. The FCA’s recent review highlights both positive and negative practices in handling vulnerable clients, emphasizing the need for improved support and communication.
Vulnerability can stem from various factors such as health conditions, financial instability, or low digital literacy. Many individuals feel uncomfortable discussing these issues, fearing judgment or worse treatment. Despite this, those who do share their circumstances often experience better support. According to the FCA, 74% of those who disclosed felt that staff asked appropriate questions, while 57% believed their firm cared about them. The regulator introduced the Consumer Duty in 2023 to ensure all customers receive fair treatment, especially those in vulnerable situations.
Sarah Pritchard, an executive director at the FCA, noted that while some firms are making strides in supporting vulnerable customers, more work is needed. She emphasized that those who seek help tend to feel more supported. For instance, a man suffering from anxiety received regular check-ins from his bank, which significantly boosted his confidence. Another customer, whose hearing aid malfunctioned during a call, now receives email summaries of phone conversations. These personalized approaches have led to increased trust between customers and their banks.
However, areas for improvement remain. Some firms lack adequate training on vulnerability for product designers, leading to unclear guidelines on what constitutes good or poor outcomes. Communication issues also persist, with one individual struggling to get information about pension increases and another receiving a complex form despite having mobility issues. The FCA urges firms to address these shortcomings to better serve all customers.
Peter Tutton from StepChange Debt Charity highlighted the importance of addressing vulnerabilities, noting that over half of new clients face additional challenges alongside debt problems. He stressed the significance of the Consumer Duty in raising standards and ensuring proper support. Kathryn Townsend from Nationwide Building Society agreed, stating that fear of penalties should not deter people from seeking help. Nationwide has invested in technologies like the Experian support hub to facilitate easier disclosure of needs.
The FCA's research underscores the critical role of empathy and proactive communication in improving customer experiences. By fostering a supportive environment, financial institutions can build trust and provide meaningful assistance to those who need it most. Encouraging open dialogue and offering tailored solutions will be key to enhancing outcomes for vulnerable customers.