Financial advice firms are lagging behind the expected spectrum of engagement when it comes to servicing vulnerable customers, research from Vulnerable Customer eXperience (VCX) and AKG Financial Analytics Ltd. has shown.
Vulnerability affected 46% of UK adults in February 2020 and 53% by October due to Covid-19, with 7.7 million UK adults reporting that their financial situation had worsened significantly as a result of the pandemic.
Specialist training consultancy VCX said organisations across all sectors need to understand how well they treat vulnerable customers and employees and noted that the long-term health of advice firms will benefit from a positive and progressive approach to its customers.
According to the research paper, there are three common failings among firms responding to disclosures of vulnerability. These include:
• not recognising the characteristics of vulnerability;
• a lack of confidence and skills to ask about a customer’s circumstances that may make them potentially vulnerable;
• and a lack of knowledge that support services exist both internally and externally and how to signpost them to customers.
VCX said to fully embrace vulnerability regulation, firms must redefine the customer/ supplier relationship to one of compassion and service, have a deep understanding of how a customer experiences its products and ask customers about any influencing factors and circumstances that are impacting them.
According to VCX, purposeful organisations recognise this as the right thing to do and will establish long-term customer relationships built upon a foundation of trust and loyalty.
The FCA has already specified that its assessment of the treatment of vulnerable customers will be integrated into its supervisory approach and businesses that have not already instigated a vulnerability strategy will need to have this high on their agenda in 2022.
The report concluded: “Attention on vulnerable customers will be an increasingly scrutinised area in the coming years. Getting ahead of this with consideration and provision for this group, as part of an overall customer strategy, should be embraced.
“Improving customer satisfaction, brand loyalty, societal purpose as well as de-risking are just some of the benefits for a business as it invests in its long-term underlying strength.”
The report can be read here: Vulnerable Customers – VCX AKG Joint Paper
