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FCA turns up the heat on dealing with vulnerable customers – MorganAsh

by: Andrew Gething, managing director of MorganAsh
  • 24/06/2022
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FCA turns up the heat on dealing with vulnerable customers – MorganAsh
As we approach high summer, it is the debate about dealing with vulnerable customers that is warming up.

The temperature is set to rise further still later in the summer, when the Financial Conduct Authority (FCA) is expected to publish its final regulations on Consumer Duty. Those rules enhance the work the FCA launched in 2015 on protecting vulnerable customers. When they are finally published, firms are expected to have nine months to implement them. 

The balance is switching from one on which the onus has been on the FCA to prove poor outcomes for consumers to a requirement that firms can produce evidence that they are not delivering bad outcomes for customers. It’s a significant change, and one in which being able to understand the vulnerability of individual customers will be essential. 

Vulnerability can be affected by many aspects of a customer’s life. So, the idea that consumers can be designated as either vulnerable or not is too simplistic – it really isn’t a binary choice. A more realistic approach is to seek to understand where individual customers lie on a sliding scale of vulnerability – from, say, one to 10 – depending on their health, wealth, financial capability, life experiences, support network and other circumstances. 

That’s the approach underpinning the MorganAsh Resilience System (MARS) – and, yes, you may have noticed that the name refers to resilience rather than vulnerability, which perhaps has more negative connotations. But it’s really just another way of measuring along the same spectrum, only perhaps starting at the other end of the scale. 

What we are seeking to do with MARS is provide a reliable (or should I say resilient?) consumer vulnerability assessment tool. The aim is to draw on as much relevant and robust data as possible to provide an objective ‘resilience rating’ for customers.   

A bit like a credit score, it is a tool that mortgage brokers and others in the sector can use to make it easier to evaluate consumer vulnerability – and fulfil the forthcoming FCA requirements. 

MARS can also work alongside user firms’ own customer relationship management (CRM) systems, allowing mortgage and financial advisers to add in any information they acquire about a person’s vulnerability.   

Mortgage brokers are at the front end of the customer relationship, and the FCA’s new rules will turn up the heat on how they deal with consumer vulnerability.  


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