Vulnerability is not as simple as black and white


The issue of customer vulnerability is not a new one in financial services. But, the approach to it varied so considerably from firm to firm that the FCA has made it a cornerstone of its Consumer Duty regulation. And, as we have seen in recent months the FCA is really prepared to show its teeth when it comes to the implementation of Consumer Duty. With the Board report deadline looming by 31 July and a further review of advice firms’ treatment of customers in vulnerable circumstances by the end of 20241  –  it is very clear that the binary categorisation between vulnerable and non-vulnerable customers will simply not cut it. This needs to be taken seriously right across firms from the board to those providing advice.

There are numerous characteristics of vulnerability and according to the Financial Lives 2022 survey, 27.3 million adults showed one or more characteristics of vulnerability – over half (52%) of all UK adults2. And since that time, we have also experienced the ‘cost of living’ crisis, increased inflation and a rise in interest rates affecting many mortgages. Therefore, it can be reasonably assumed that an adviser with an average portfolio will have at least one customer with a characteristic of vulnerability.

Vulnerability can be difficult to identify with one adviser/client conversation

However, assuming is also not enough, and financial advisers face very real exposure in this area. This comes at a time when the advice industry is feeling the pinch with other increased compliance burdens and potential profit erosion from implementing the necessary changes. The need to clearly identify characteristics of vulnerability in every customer will require more consideration, communication, administrative time and ultimately will lead to more pressure on advisers – the latter of which might be a tipping point in a stressed and stretched industry.

Vulnerability can be difficult to identify with one adviser/client conversation, particularly if that is only conducted annually, and that could leave an adviser and their customer exposed. And while human interaction is vital to sustaining and building long term relationships, it is not always the human that can identify the vulnerability in a conversation. But; the right technology can.

Natural Language Processing is what it says – it understands natural language patterns and phrases to analyse and interpret the words being used. It is the subset of all Generative AI Large Language Models (LLMs), such as Chat GPT or Bard, as it understands what and how we communicate through the words and phrases we use. This is a crucial tool in any AI technology being used to monitor, identify and flag vulnerabilities. It does, however, fare much better when it is designed and operated in a vertical capacity – financial services specifically, for example.

It can be so effective that with the click of a button it can monitor all conversations and provide a range of vulnerable characteristics through interpreting conversations in detail. If the right solutions are used this can greatly improve provision of advice, ensure that all vulnerability is being identified and considered, and hugely reduce administrative burden – offering peace of mind to customers and advisers, and freeing up more time for the valuable and profitable human relationship development.

The financial advice industry is under pressure and the regulator means business, but the topic of vulnerability should not make advisers feel vulnerable. There is technology that makes a considerable difference and bring benefits to satisfy advisers, customers and of course, the regulator.




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Joseph Twigg is CEO of Aveni. They describe themselves as a passionate team of computer scientists, engineers, designers and creatives. They want to transform the Financial Services industry by fusing AI with human interaction. With this approach, they can enhance risk monitoring, transform understanding of customers and agents, better manage staff performance, automate, drive down the cost to serve and so more

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