Only four out of 10 vulnerable customers say they have disclosed their needs to their financial services provider, research from the Financial Conduct Authority (FCA) reveals.
However, the research shows those that do open up tend to have better experiences.
Three quarters, or 74%, of vulnerable customers who told their firm about their circumstances said that staff asked the right questions to understand their situation, 57% said their firm ‘cared’, and 58% said their firm took action to provide support they needed.
The research finds that vulnerable customers are more likely to report a negative experience with financial services firms, such as their bank or insurer, when compared to non-vulnerable customers.
The FCA issued guidance to help financial services firms support consumers in vulnerable circumstances in 2021 and introduced the Consumer Duty in 2023, which requires firms to deliver good outcomes for all customers, including those in vulnerable circumstances.
Today, the FCA has published a review and good and poor practice examples to further help firms provide the right care consistent with the Consumer Duty.
FCA competition, markets and international executive director Sarah Pritchard says: “It can be hard to tell your bank or insurer about your specific needs but those who ask for help tend to feel more supported.”
“We’ve seen good examples where financial firms are making a difference for vulnerable customers, but we know that vulnerable people report more negative experiences than others.”
“We want firms to build on the good work identified, to help people open up and make sure they get the support they may need.”
AJ Bell director of public policy Tom Selby adds: “The term ‘vulnerability’ covers people in all manner of situations, from those who face mental health struggles, physical health issues, cognitive impairment or financial hardship.”
“The often transient nature of vulnerability means it can also be incredibly difficult, if not impossible, for firms to spot. While speaking to your financial services provider might be the last thing you want to do when you hit hard times, this research shows that people who do often have a better experience as a result.”
“Reforms currently under consideration by the FCA which will introduce more personalised nudges, known as ‘Targeted Support’, have the potential to drastically improve the help and support millions of people receive, including those with vulnerable characteristics.”
Simplify Consulting lead consultant Jayne Brown points out: “It comes as no surprise that the level of customers sharing their vulnerabilities with their financial services provider is so low, but it is positive that where they did, 74% felt that the firm asked the right questions.
“There’s been an increased focus over previous months for firms to use tools and techniques within their processes to identify vulnerability characteristics and most of the time firms struggle with this due to the nature of transient vulnerabilities, the complexity and cost in adopting technology and having suitably qualified teams capable of providing the support required.
“Historically, it has been incredibly difficult to identify those more subtle vulnerabilities and solutions that are still needed, especially as customers are reluctant to share their personal situation.”
