Back in 2017, the FCA’s ‘Financial Lives Survey’ found that up to 50% of people in the United Kingdom display at least one characteristic of vulnerability. We could argue that we all have the potential to be vulnerable for one reason or another. Since then we’ve seen the arrival of Covid-19, making effective and appropriate vulnerable customer management more important than ever before.
It’s should be no surprise to any firm to hear that the FCA has found a correlation between a healthy company culture and good vulnerable customer management. Although the regulator acknowledges that most firms have taken great strides towards a more customer-centric culture, it believes this is mostly the result of their ongoing focus and supervisory scrutiny over the years.
The question to ask yourself is this: is your vulnerable customer strategy something you do simply because you have a regulatory obligation, or is it because you really see the benefits of this for your customers and your business?
That’s a big question!
Certain studies on organisational behaviour have shown that there are limitations on how much can be achieved from external factors, like externally imposed regulation. Instead, the biggest influences tend to come from inside an organisation (internal factors). In a nutshell, the organisational culture. While these studies were undertaken outside of financial services, there’s a lot that we can learn from them.
The pandemic may have highlighted and exposed firms’ ability to support their more vulnerable customers. Given the financial services sector is only just starting to fully recover from the financial crisis, when trust in the industry was at an all-time low, the steps you are taking to support your vulnerable customers is the key to maintaining that progress. This is not just a regulatory matter. It’s a matter of decency, integrity and building customer trust. How you act now can make or break your reputation.
Of course there are processes you can put in place to make it happen. But how do you ensure that your approach is one of culture as well as compliance? After all, it is culture that will define the personality of your organisation. It drives behaviours and will impact how individuals within your business think, feel and act. Really good vulnerable customer management is less about policies and procedures and more about empathy, understanding and compassion.
So, when you are looking to assess your vulnerable customer strategy, you must consider culture. You should seek to understand the extent to which the personality of your business creates the right organisational structures and processes that drive behaviours. What are the formal and informal rules by which decisions are made, and are these espoused by the tone from above? Does the culture of your business support front-line staff to remain informed and empowered, and to provide the right direction and solutions for your customers?