The Protiviti Vulnerable Customers Virtual Roundtable - Session 2

Key findings

• The FCA’s commitment to ensuring vulnerable customers are treated fairly will continue to be a high priority in the coming years and will extend into supervision by 2021/2022.
• Compliance with the FCA framework around treating vulnerable customers fairly is about more than policy and process, and will require widespread culture change led by the executive team.
• Training should be given to all employees, not just customer facing staff, and include those involved in product development and marketing.
• Employee training should also focus on enhancing on communication skills so that sensitive conversations with vulnerable customer are handled with the level of care and attention it deserves.

Ongoing guidance

The FCA has issued a series of publications on treating vulnerable customers fairly since early 2015, and is due to publish its finalised guidance by the end of 2020 / early 2021. The key recommendation is the need to embed fairness into business strategy, which the FCA will begin to assess through its supervision rounds from 2021/2022.

The regulator has a ‘consistent and relentless’ focus on meeting the needs of vulnerable customers. The main areas in which the FCA expects to see action from financial institutions are: understanding vulnerable customers’ needs, customer service, skills and capabilities, product and service design, monitoring and evaluation, and communications.

As a roundtable poll, Protiviti asked attendees to name their biggest concern surrounding the vulnerable customers framework, and their responses ranged from ‘demonstrating compliance’ to ‘how to shift culture’ and from ‘payment holidays’ to ‘GDPR’.

The biggest cause for concern currently appears to be meeting the FCA requirements and demonstrating that this is being done effectively.

While it was agreed that strong monitoring controls will help with this challenge, there was awareness that  firms will need to implement monitoring and reporting across the whole product cycle and take a holistic view: a customer may be vulnerable in one product area but not another, and may also be vulnerable only for a short time.

Adapting key policies to facilitate fair treatment

One of the roundtable participants described how taking a holistic view has worked more effectively than adopting a piecemeal approach driven by compliance. Once the business (first line of defence) picked up on the need to introduce change, the initiative accelerated significantly and operational staff took responsibility for developing a revised policy.

Attendees also noted the importance of remembering that vulnerable customers are not just older people, and that customers may move in and out of vulnerability throughout their lifetimes, such as when they face a sudden family death, for example. The key is training everyone in the business to recognise who could be vulnerable, as well as the breadth of vulnerability: policies on paper and processes are not all that there is to it.

The current pandemic makes it difficult to predict how many people will need to be trained, but a holistic approach means that everyone is equipped to deal with all customers. Passing vulnerable customers from one team to another is not good practice is any case, because customers prefer to deal with one person, especially if they are facing difficulties.

Customers will also receive a more consistent service if they are looked after by a single customer service agent, because people can make slightly different decisions. Once firms embed principles of fairness in all staff, subjectivity becomes more manageable.

Participants noted that this implies a change in company culture, which some firms are struggling with. It has to start from the top, led by the executive team, and needs to extend into how firms think about the markets they target, the products they sell and how they want to communicate with customers. Breaking a culture change programme down into these simpler elements can help to achieve firms’ objectives.

Protiviti subject matter expert confirmed that the most successful change programmes happen when they are under the ownership of the business, rather than run by the compliance team, even though they are ultimately being driven by the industry regulator.

FCA guidance on treating vulnerable customers fairly is consistent with the Senior Managers and Certification Regime (SM&CR), and it will be business leaders who are consulted when supervision begins. Documenting how business leaders oversee customer touchpoints is the easy part, but the whole organisation needs to live and breathe a different culture, especially when developing new products.

Role-specific training to facilitate fair treatment

Training needs to support policy and culture change, but cannot be a simple checklist exercise because vulnerability is a broad concept that means different things to different people. It is also tricky when firms need to help multiple business heads understand a common view of vulnerability.

One firm tackled this by giving detailed guidelines on how customer service needed to change, then asking each business leader to attest that they had addressed the guidelines and to sign off on compliance with FCA guidelines.

In general, attendees agreed that training needs to be extended to everyone in the firm, not just customer facing staff. The most effective training is based around scenarios, which trainees are asked to respond to and then explain how they would handle particular situations. This more in-depth training can be supplemented with CBT courses that can be rolled out widely across all staff.

Communication with vulnerable customers is also an important element of any training. Vulnerable customers are likely to be stressed and may find it more difficult than usual to understand what customer service staff are telling them, so more patience and empathy will be needed.

One of the participants noted that firms are beginning to test and use speech analytics technology that enables them to detect language and phrases that people use when they are facing challenges. This helps to identify vulnerabilities in customers earlier and to introduce appropriate measures.

The social element of sharing and learning from each other’s experiences should not be forgotten, especially since people learn in different ways. Teams get a lot of value out of discussing good and bad scenarios in collections, for example, especially when there has been a positive outcome for a customer.

As well as building real-life scenarios into training, it helps to transfer this type of learning from customer facing to non-customer facing staff, particularly those involved in product development. The focus should always be on the customer, and how to ensure they have a great journey, no matter what condition they are dealing with at the time.

Additional measures taken in response to the FCA’s framework

In conclusion participants agreed that firms should not seek to treat vulnerable customers as a separate group, but endeavour to treat every customer fairly. There could be value in building a series of typologies or personas that are considered when new products are developed, so that differing customer needs are taken into consideration.

It was noted that more could be done by trade bodies to partner up with charities and special interest groups so that the requirements of specific groups are better represented. It is also beneficial for the organisations as they have limited resources and cannot interface with multiple financial institutions.

An online poll with attendees found that while a larger proportion feel they have already embedded policies on vulnerable customers into their organisations either effectively or very effectively, most feel that there is still more progress to be made on training and empowering employees to make decisions on how such customers should be treated. Overall, however, firms were more confident than not that their vulnerable customers receive a fair outcome in a timely manner.