More than half of adults would be identified as vulnerable under the categories of the upcoming Consumer Duty regulations, new findings from Watermelon have shown.
According to the customer experience group, who conducted a survey amongst 3,500 UK consumers of financial products and services, 56% of UK adults would be identified as vulnerable, compared to 47% in May 2022.
With the new rules set to come into force from 31 July, Watermelon said the findings highlight the scale and importance of the challenge at hand, particularly for vulnerable customers.
Whilst the cost of living crisis has impacted people, with 82% of vulnerable customers agreeing that it has impacted their priorities and preferences, there is still a large proportion of consumers describing themselves as living with pre-existing physical and mental vulnerabilities and 88% of this group also agree with its impact.
The research also shows that those customers living with a physical or mental vulnerability are almost 10 times more likely to be struggling with bills and regular payments than non-vulnerable customers. When asked about their current financial situation, only 5% of this cohort agreed that their income currently exceeds their outgoings and that they are able to save comfortably. More than a quarter (29%) cited reducing their debt as their top financial objective to achieve this year.
Despite this, Watermelon said financial services providers are falling short, with only 38% of vulnerable customers stating that their provider was aware of this. For those who were made aware, additional support was only offered in 62% of cases.
Sian Kerr, chief strategy officer at Watermelon, said: “The FCA’s definition of ‘vulnerable’ is a broad church. So it is particularly worrying that there’s such a clear disparity between the ‘vulnerable’ and ‘non-vulnerable’ when it comes to financial wellbeing and resilience. We’ve found a significant number of vulnerable customers have ambitions of paying off debt but without being able to put aside a little each month or at least a plan to get to that point this is a worthy ambition that is likely to go unfulfilled.
“By understanding customers better and working with those at particular risk, financial services providers are best positioned to help all their customers, including the vulnerable, toward a more confident and resilient financial future.
“With Consumer Duty on the horizon, the FCA, along with these providers, will be rightly judged on whether these numbers improve.”
[Main image: ed-leszczynskl-Ar6eXpQaCwk-unsplash]
