Just four in 10 (42%) vulnerable customers are disclosing their needs to their financial services provider, according to the Financial Conduct Authority.
However, those that do open up tend to have better experiences, the regulator said.
Its findings showed that three quarters (74%) of vulnerable customers who told their firm about their circumstances said that staff asked the right questions to understand their situation, while 57% said their firm ‘cared’ and 58% said their firm took action to provide support they needed.
However, a quarter (25%) of those in vulnerable circumstances said they feel uncomfortable explaining their situation to a financial services provider. The FCA said its review found there were a number of different reasons for customers in vulnerable circumstances choosing not to disclose personal situations, with more than a third (37%) explaining they felt embarrassed. A quarter (24%) said they did not want to be treated differently and 23% are worried they may get a worse deal, while 19% said they did not know their firm would help.
According to the FCA, vulnerable customers are more likely to report a negative experience with financial services firms (44%) compared to non-vulnerable customers (33%).
Sarah Pritchard, executive director, competition, markets and international said: “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.”
Tom Selby, director of public policy at AJ Bell, said: “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. Firms often have different processes in place for customers with specific vulnerabilities, but these can only be triggered if the firm is aware of your situation.”
Selby said for someone using all of their retirement pot to buy an annuity, being honest about any health or lifestyle factors that might reduce life expectancy is vital.
“Reforms currently under consideration by the FCA which will introduce more personalised nudges have the potential to drastically improve the help and support millions of people receive, including those with vulnerable characteristics. Firms will design interventions under Targeted Support based on common characteristics of ‘people like you’, utilising data on cohorts of customers to inform the nudge. Being honest about any potential vulnerabilities you have will be critical here too, as the more a firm knows about your circumstances, the better targeted its suggestions will be.
“It might feel a bit ‘un-British’ to talk about vulnerability, but the more open you can be, the more likely you will get the help and support you need,” Selby added.
Anthony Scammell, customer outcomes director at Quilter, said: “The industry has come a long way when it comes to the treatment of vulnerable clients, however, clearly as the FCA data shows, sufficient levels of trust have not been established with everyone to get vulnerable clients to open up. As such, while initiatives and technology can help identify potential instances of vulnerability, some may be falling through the cracks. What can often be easily forgotten is that vulnerability can affect anyone, regardless of the level of assets they may have.
“The Consumer Duty has helped to underline the importance of having the right processes in place achieving this. It is something that should be at the heart of a financial services company’s culture. This is not a box-ticking exercise and businesses will be expected to demonstrate how they have improved processes and how good customer outcomes are being met for everyone, including those that are vulnerable.”
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