The vulnerability challenge

The Financial Conduct Authority (FCA) has published guidance on the fair treatment of customers in vulnerable circumstances.

Now you need to show what you’ve done and whether it has improved customer outcomes. But there’s no simple formula or algorithm for meeting the challenge.

Here’s where our user-centric tools can help.

It’s not always who you think

Customers in vulnerable situations are not edge cases. The FCA’s 2020 Financial Lives survey suggests that 46% of UK adults (24 million people) have one or more characteristics of vulnerability.

And no business is exempt from the challenge. In our research, we’ve seen affluent and educated people make flawed or erratic decisions when faced with new situations.

All it can take is a bereavement, a redundancy, a relationship ending. Life is full of twists and turns.

Someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.

FCA definition of vulnerability

The impact of Covid

Data from debt charity StepChange shows that thousands of people are being pushed into vulnerable situations as the effects of the pandemic play out.

2.5million People facing financial crisis

5.6million People struggling to afford essentials

It’s a complex puzzle

The FCA’s guidelines don’t tell you exactly what to do. How could they? It regulates 60,000 firms – and says it’s down to each one to respond appropriately.

The list of vulnerability drivers and characteristics they’ve created can help you think about the risks and harms that seem most relevant to your customer base.

Health

5% of UK adults affected

Life events

29% of UK adults affected

Resilience

27% of UK adults affected

Capability

20% of UK adults affected

But how will you successfully improve outcomes? The drivers are fluid and intersect unpredictably. And human lives rarely map neatly to even the most carefully categorised labels – we’re reminded of that every day in user research.

This all makes providing an ‘appropriate level of care’ a complex problem. It’s no surprise that the firms we’ve spoken with are wrestling with similar questions:

What indicators of vulnerability are we looking for?

How do we identify customers in vulnerable circumstances?

How do we start the conversations with customers?

How we can help

Understand

There’s one thing the FCA is crystal clear about: to achieve good outcomes every firm needs to understand its own customers like never before.

Qualitative research will take you beyond the myth of the average customer, to understand the breadth of needs of your target market and answer the question: what’s an appropriate response for your business?

Respond

The most reliable way to ensure that all customers are treated fairly is to follow a user-centred design process that puts them at its centre. It will help you to:

Embed consideration of customer vulnerability across your business – from product and service design through to front-line delivery Assess service effectiveness and reveal how to improve it Build empathy and a healthier customer-centred culture

Why CXPartners?

Our research draws on lived experience

We’ve designed services for cancer patients, people suffering financial shocks, survivors of domestic abuse, and people who have experienced a mental health crisis.

The key to success? Designing with them, not for them. It takes expertise and care to research with people in vulnerable situations, but it’s worthwhile.

When Samaritans asked cxpartners to help design their first-ever chat service it was clear that the level of trust would need to be exceptional. But trust is easy to get wrong and indeed when we tested our working Samaritans prototype before it launched, it revealed a hidden problem.

Without a user-centred approach, an intervention intended to support service users may have instead increased risk of harm.

The opportunity

Focus on vulnerability to make services better for everyone

If you’re thinking about customer vulnerability as an obligation or purely in terms of risk reduction then you may be missing an opportunity. Respond with a user-centred approach, and regulatory-driven changes can improve business health in other ways too.

That’s because when you design for people with a wide variety of needs, you gain insights into everyday problems. And you’re forced to come up with more robust solutions. The result is innovation that benefits all of your customers.

Through an exemplary focus on regulatory compliance and customer outcomes, cxpartners helped us achieve improvements in commercial performance.

Thomas Foster Director of Acquisitions, RAC

Learn more about The vulnerability challenge

Reach out to Stu Charlton

Strategic Director

stu.charlton@cxpartners.com