Director, product management compliance Aptean
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Vulnerable customers - a focus on best practice?

2nd Dec 2019
Director, product management compliance Aptean
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In the wake of the FCA’s October deadline for responses, Martin Ellingham, business leader, Aptean Respond, what do the proposed guidelines mean for the financial services industry?

One of the most hotly debated topics at our recent Complaints Working Group (CWG), the FCA’s proposed guidelines on the management of vulnerable customers have divided opinion across the industry.

While few would argue with the sentiment behind the proposed guidelines, for many, greater clarity is needed on how vulnerable customers should be defined and identified, particularly in the case of temporary vulnerability, and precisely how this demographic will be legislated.

What is clear is that complaints management is intrinsic to the identification and management of those who the FCA describes as people who, “due to personal circumstances, are especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care”.

Complaints management is key

Many customers who fit this definition are likely to be identified in the complaints management process. Complaints handlers are at the coalface of the customer’s journey, entering into dialogue with those who may demonstrate an inability to understand or process information being discussed. Anything which falls outside of what is deemed appropriate for a particular interaction, and therefore indicates that a customer may not be making a fully informed decision, can be flagged by the handler. With this in mind, it is crucial to ensure that complaints management processes are robust, and that staff have the right skills, empathy and care.    

This is echoed by much of the FCA narrative on the subject, which focuses on the need for the industry to deliver appropriate levels of care and embed the principles of managing vulnerable customers into their culture.

Knowing your customer

But hang on, isn’t that just good customer service? While it is clear that the new guidance will see additional processes being adopted, arguably it should not represent a massive leap for those firms which already nurture a culture focused on customer care and social responsibility. As part of a comprehensive customer strategy, many already have the skills and frameworks in place to identify and manage specific needs or requirements of their customers as part of optimising their overall experience. 

Customer service at the core

Many aspects of the financial services industry are cyclical and I wonder if the FCA’s focus on customer vulnerability is actually part of a backlash against excessive customer automation. Rather than being viewed as a necessary evil, the new guidance could in fact see a return to the core principles of customer service, whereby companies build strong relationships with their customers, and truly understand and meet their needs at a given time.

Regardless of the outcome of the FCA consultation, understanding the specific needs of customers is surely at the heart of providing the right product at the right time, accompanied by the best service. In doing so, not only will financial services providers harness both loyalty and customer profitability, but will do so in a way which meets regulatory needs and consolidates a reputation for best practice.

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