Financial services analytics specialists AKG has published a paper called Navigating the evolving regulatory landscape in a post-pandemic world which explores key issues relating to vulnerable customers and financial well-being.
The paper focuses on consumer views and the impact of the past two years, while assessing confidence levels and concerns when it comes to managing finances.
It also looks at adviser understanding of, and readiness for, the Financial Conduct Authority’s (FCA) vulnerable customers framework as well as awareness of how this fits with the regulator’s Consumer Duty rules.
In addition, AKG’s paper examines adviser definitions and perceptions of vulnerability given the impact of Covid-19 and the challenge of inflation. It looks at what the industry is doing to better identify, understand and serve vulnerable customers in future in its attempts to ensure both compassionate service experiences and positive customer outcomes.
Views on vulnerability
The paper revealed that only 17% of consumers believe the financial services market provides adequate resources to support decision-making when customers are vulnerable. A third of consumers admitted to making poor financial decisions in the past two years.
The research also identified that nearly two-out-of-five (39%) of advisers are adapting to changing definitions of vulnerability. Almost half (46%) said they had noted that clients are accessing more money following the pandemic and cost-of-living crisis.
Matt Ward, communications director at AKG, said: “Providing valuable support to vulnerable customers is a crucial challenge for financial services to tackle and given the impact of the pandemic and cost-of-living crisis, it is evident that approaches will need to evolve as more people are potentially identified as being vulnerable from a financial standpoint.”
Around half (47%) of the advisers surveyed would welcome support from providers on preparing for Consumer Duty and vulnerable customer requirements. More than half (55%) of adviser respondents value support on identifying and supporting vulnerable customers and 50% said they value training to help identify and service vulnerable customers.
The adviser survey found that 66% are well prepared for the vulnerable customer framework. Just under a third (31%) have done some work on this, but acknowledge they need to do more and 3% are unprepared.
Jackie Boylan, head of Fidelity Adviser Solutions, added: “Through the context of the tough times and uncertainty of the past two-to-three years, this research shows how we need to continue to place advisers and their customers at the heart of our businesses.
“It is clear that we are making good strides in prioritising support for vulnerable customers and their financial well-being, and it’s reassuring to know that, as an industry, we are aligned in what we think is most important.”
Consumer Duty
The research also identified that more than half (52%) of advisers are well prepared for Consumer Duty requirements, 37% have made some progress and 11% say they haven’t devoted enough time or resource to this yet.
Dimpel Patel, head of client services, RBC Brewin Dolphin, said: “Consumer Duty is a significant and unique opportunity to challenge all business functions to focus on the needs of all customers, and the depth and range of their needs.
“If, as an industry, we develop a progressive focus on how we demonstrate positive client-centric values, we are convinced that this will continue to improve outcomes for all clients.”
