Can you give me a breakdown of your current client database? How have you categorised your clients? How many of your clients give you repeat business or referrals? How many leads have not resulted in new business, do you know why? How have you sub categorised your vulnerable customers?
Assuming that your business is hoping to grow, wouldn’t it be useful to know who your clients are now, where new clients are coming from and whether or not they complement your existing business? Are you identifying areas that you need to improve upon to support your growth plans?
I’m asking these questions based upon recent experience and industry news since my last article.
This month the FCA has published Consumer Duty Board Reports: good practice and areas for improvement after reviewing the first annual board reports from 180 firms. The firms surveyed were a cross section of FS disciplines; retail banking, wholesale, insurance, payments, consumer investments and consumer finance sectors, and included 55 firms with less than 10 employees. I suspect there are lessons to be learnt by almost all regulated firms.
Vulnerability can be temporary, and some might say difficult to anticipate but not if you have analysed your different customer types thoroughly in the first instance
There are five areas where the regulator wants to see improvement;
- Better data quality
- Comprehensive view across distribution chains
- Analysis of different customer types
- Challenge from the board
- Taking effective action
With my questions at the top of this piece you can see I want to focus on the Analysis of different customer types. The FCA said “Some firms did not evidence that adequate consideration had been given to outcomes for different groups of customers, including those with characteristics of vulnerability.”
You may remember my last article where I discussed the help and support my relative has had, or lack of it, from financial services firms. To echo the FCA findings I would like to give you some specifics and ask you to reflect on annual Consumer Duty Board reports and how the following might be incidents of poor outcomes from customers.
We were told by one bank, to go to a “convenient Pop Up” in the local townhall where we could speak to a member of staff who would register our Letter of Power of Attorney. Upon arrival, our pre booked slot was late due the customer ahead of us. When the appointment did start, my 80-year-old relative was told that he had to scan an 18 page document and email it, as the “pop up” didn’t have a photocopier. And this was a customer with no internet, a phone that came out of the ark with Noah and was obviously incapable of functioning due to the distress of having a wife in care! I’m sorry to say my temper took the better of me and I pulled the Consumer Duty obligations card, which seemed to bamboozle the assistant, who told me she wouldn’t tolerate verbal abuse! Instead I had to scan it myself which still took over an hour from home, as we had no choice. N.B. I know you can normally do all of this online but the Office of Public Guardian had only issued a hard copy at this stage – another tale of woe!! Accounts with this bank are now closed.
A different bank had been bombarding my relative with text messages saying he should consider switching accounts to gain more interest. The instruction was to “click here” to see the other opportunities. I direct you to my comment above about Noah’s phone!! Not an option. Plus he thought it was a scam text. It wasn’t a scam, but having explained in branch that his technology access was almost non existent, why would they keep sending these? Which is another point, I had to say “please can you record my uncle as a vulnerable customer, so all your dealings are mindful of that fact” because it was clear no one was acknowledging or adjusting to his obvious vulnerability status. Accounts with this bank will be closed soon.
We did experience some good practice with a third bank, who were very empathetic without being patronising during discussions about the process of getting access to his wife’s account through the LPA. Their subsequent follow up was personalised, clear with dates and actions highlighted, which was much appreciated by my uncle. He will continue to use this bank for his accounts, he likes them. In all these examples, he wanted to be present in face-to-face meetings, as he thought that was the best way for him to understand what was required.
With banks and insurers, of course I accept the customer relationship is transactional, and your KYC will be based upon what you get told by the customer, often only on an application form. However, the Consumer Duty obligations really come into play when you are dealing with those customers who want to claim, make a change or simply need help with the product or service they hold with you. But as soon as you know you are dealing with a vulnerable customer, it must be recorded and dealt with appropriately, to ensure they are getting the outcomes best for them. These outcomes may be different from other customer types.
Of course, for financial advisers and wealth managers, their relationship with the “client” is more personal and the KYC should be bang up to date with notes of temporary or permanent categories of vulnerability recorded. It doesn’t seem right that we still find too many relationship managers, not subcategorising vulnerability or worse still, not acknowledging the correct statistical amount of vulnerable customers using their services.
As the FCA observed “Some firms presented limited results showing data related for customers with different characteristics of vulnerability, sometimes treating it as a ‘catch all’ category rather than assessing the specific needs of certain groups of customers.”. How many of your customers are excluded from your online support because they don’t have internet access? They need and deserve the same good outcomes and you need to be able to respond as soon as they are identified as such. Please don’t rely on an informed relative to tell you that! If you don’t show customers you are responsive to their needs, they will walk away.
Further to the personal observations above, a colleague recently told me about a firm where the marketing dept had stopped using shiny paper for client communications as customers with certain eye conditions find it difficult to read. I’ve also seen a firm include wording on application forms to identify those with a specific communication preference and written formatting style (i.e. larger font or use of colour). The FCA’s review findings cited a number of similar examples including several firms who have “introduced British Sign Language communications, with one including an assessment of early results that suggested it was a success and was experiencing increased demand”. All good, practical examples which demonstrate some firms are responding not just in spirit but offering tangible benefits for different customer types.
Vulnerability is not “one size fits all”. Vulnerability can be temporary, and some might say difficult to anticipate but not if you have analysed your different customer types thoroughly in the first instance. Equally, different categories of customers tend not to be “one size fits all”. If you haven’t done the leg work on the analysis, reviewed the demographic of your existing customers, sub categorised your vulnerable customers, considered your targeted marketing and its success with different types of customers, you are likely to be missing the point.
The result over time, could be jeopardising your business growth plans. Businesses need to become more creative to deliver better outcomes for customers, which most agree is good for business.
