A study published by the Financial Conduct Authority (FCA), recently found that 31% of adults had experienced a drop in household income during the Covid-19 pandemic.

This has prompted the regulator’s loudest call for action yet for the industry to minimise further financial harm.

Following emergency guidance in April, the FCA has engaged with mortgage lenders in a number of ways to ensure ongoing assistance for those in most need.

Banks and building societies have been working hard to support their customers throughout the Covid-19 pandemic, whilst pivoting their operations to ensure safe working environments for their in-house and outsourced teams.

The latest FCA announcement provides further relief for borrowers, as mortgage deferrals continue into the winter months. This underlines the continued imperative for firms to provide support for borrowers who are most at risk.

Regulatory expectations

It’s understandable that firms wish to get back to ‘business as usual’, said Jonathan Davidson, executive director of Supervision, Retail and Authorisation last month.

But what does Business as Usual now look like? In July, The FCA Vulnerability and Harm survey estimated that 12 million UK adults had low financial resilience. As the Covid-19 pandemic enters a second, and potentially more severe, wave many customers will continue to face ongoing financial difficulty over the winter months.

The message from the regulator is that to protect these customers, lenders must now move away from a ‘crisis’ approach towards more tailored support which prioritises the prevention of harm.

Supporting customers when they need it most

In effect, this means that firms should refocus their internal control environment towards a new operational reality, one of ongoing financial uncertainty and unsustainable debt.

With resource pressure on all teams, the key to successful customer service and complaints handling will be an alignment between accountable decision making through the Senior Managers and Certification Regime (SM&CR), adequate training of frontline staff and a flexible approach to operational capacity planning.

Together, these measures will allow lenders to provide appropriate support to their mortgage customers in the most efficient and effective manner.

Accountability and culture

The FCA introduced the SM&CR as a framework for accountable decision making and mechanism to reinforce the rigour of internal control environments.

By setting high standards for an empathetic, customer-centric service, senior managers can encourage a positive culture at every level of the organisation, fostering trust and loyalty from borrowers and the regulator alike.

Prioritising the vulnerable

Front line staff have a very real responsibility to identify and manage those in difficult financial situations at the earliest opportunity.

However, it is a demanding job and pressure on teams will increase if we see an uptick in enquiries now mortgage deferrals have been extended.

With borrowers’ situations changing week on week in the current climate, it is essential that adequate training and support are provided.

This will help call handlers to feel more confident in identifying, supporting, and having sensitive conversations with customers in financial distress.

Robust quality monitoring and root cause analysis of outcomes arising from any interaction, can help assure firms that the correct approach was adopted, or highlight changes required to ensure that processes are as effective and empathetic as possible.

The role of automation

Many firms have relied on online communication tools to balance reduced resource with increased customer contact volumes during the pandemic.

However, the human touch is imperative to customer service and complaints for those in more complex or sensitive situations. For people who are feeling isolated, there’s a real opportunity for firms to build relationships that will help them feel connected and supported at this time.

The FCA has recommended firms ‘keep the door open’ to automated approaches, though, to free up human resource for delivering appropriate outcomes.

For example, data-led insights can help flag those moving into vulnerability through analysis of bank statements and payments. Such automation can help flag more vulnerable borrowers for a more personal, bespoke approach as early as possible, ensuring they don’t slip through the net.

A holistic, omnichannel approach

Many customers also now expect a fully digital, seamless communication experience with their bank or building society.

Understandably, they no longer have a single, static channel of choice for contact and instead, require an omnichannel customer service and complaints experience.

To manage changing customer needs, front line staff require a ‘single customer view’ which can amalgamate and process the different interactions a firm has had with each individual. Again, technology has a role to play in providing customer service teams with a higher chance of spotting vulnerability and creating the opportunity for a deeper customer relationship.

Support for teams

A tailored approach to customer service also requires a more agile workforce and flexibility in operational capacity planning.

Whilst customers were forgiving of firms taking time to respond at the beginning of the pandemic, they now expect to receive a more normal level of service.

As customer service and complaints staff continue to split their time between the office and remote working, it is important to keep teams motivated in order to drive the best outcomes for customers.

Key to maintaining morale is providing sufficient capacity to allow call handlers to understand and empathise with the needs of customers in financial difficulty.

Together, these measures can ensure that borrowers who suffer a loss of income are supported in the most empathetic, efficient, and effective manner possible.

Firms that can foster a customer-centric internal culture whilst prioritising those who find themselves vulnerable, will reap the rewards with more satisfied, loyal, customers following the pandemic.

Ben Garratt is director of retail banking at Huntswood