Andrew Gething (pictured), managing director of MorganAsh – which last year introduced a range of upgrades to its consumer vulnerability assessment platform – said firms needed to make sure they were engaging directly with clients regarding vulnerabilities.
He said clients could feel alienated if firms made judgements behind their backs, and extended the warning to firms in the distribution chain that report few or no vulnerable customers.
Gething said some firms were relying on data sourced from credit companies and socioeconomic data to analyse their clients.
Aim to reduce harm
Gething gave the example of obtaining data through open banking, which showed a consumer used gambling websites.
He added: “While this may be useful information, it runs the risk of alienating consumers – because the data is obtained through the back door, without their awareness. When considering how to obtain data, the priority should be on its use to reduce harm, not the simplest way to obtain it.”
Gething said: “Since engaging with consumers is an important part of managing vulnerability, making a decision based on inferred or indirectly sourced data has the potential to scare consumers – because these judgments are made behind their back. Just as worrying is the number of firms across the distribution chain still claiming they don’t have any vulnerable customers – this simply isn’t possible, and speaks more to both a lack of engagement and a lack of good-quality assessment data. Not only do firms run the same risk of alienating clients, they could also fall foul of the regulator when it enforces Consumer Duty.
“In our 20-plus years’ experience of assessing vulnerable people, we have always found that it is best to go to the consumer and engage directly with them on their issues. This early disclosure is more likely to lead to remediation – or, at the very least, to an adapted engagement process that is better-suited to their needs.”
A consistent approach to vulnerability
Gething’s warning comes after the Financial Conduct Authority (FCA) raised concerns that some firms were “lacking” in their documentation and suggested there were instances of “repackaging existing data”.
The regulator also found that some firms were reporting a few or no vulnerable customers.
MorganAsh said this contradicted the FCA’s Financial Lives survey, which revealed around half of the adults in the UK had some vulnerability.
Gething said: “For any organisation managing vulnerability, there is a need to have a consistent way to assess, monitor, communicate and evaluate who is vulnerable. In addition, firms need to be able to assess both the level and severity of the vulnerability to ensure the appropriate actions can be implemented consistently.
“Without an objective way to assess, record and monitor different vulnerabilities, there will always be issues with subjectivity and consistency. As a result, it will be very difficult to scale services and share data, which should be the aim – streamlining this process and improving services for vulnerable customers in particular.”
