Sarah’s story
I, and other members of the local community occasionally assist at our local food bank. The food bank provides emergency food and support to community members in need, like Sarah. Prior to her recent divorce, she and her partner lived off a modest joint income. Her husband’s income represented over 65% of the joint income.
Following divorce, Sarah relied upon finance and credit to fund large expenses (e.g., car and accommodate deposit). Now, she finds periods of financial distress when unplanned expenses occur. In periods of financial distress, Sarah occasionally calls upon the food bank for support.
Through low levels of financial resilience following her divorce, Sarah is now vulnerable. Unfortunately, this is not unique. Sarah is one of over 3 million lone parent families in the UK. This accounts for c15% of families in the UK.
Unpacking the reality of vulnerability
There are a range of convergent conditions and environmental factors that influence vulnerability. The UK’s Financial Conduct Authority (‘FCA’) appears to be the most complete definition of vulnerability:
“Someone who, due to their personal circumstances is especially susceptible to harm. Particularly when a firm is not acting with appropriate levels of care.”
Vulnerable customers may be at greater risk of harm, especially when things go wrong. It is important to recognise that vulnerability is not absolute – vulnerability is a relative state. Vulnerability can impact any group and there can be several overlapping vulnerability states at one time. When assessing vulnerability, a degree of societal contextualisation is required.
Providers of the key market services should – through their practices and operating models – have recognised Sarah as a vulnerable customer, and act accordingly. Unfortunately, this was not the case in respect to many of her market interactions.
The implications of failing to identify and support people like Sarah within our communities
Vulnerability is increasing and is an area of significant concern. Governments, Regulators and community groups are actively looking at better ways of identifying and managing vulnerability. Regulators, such as the FCA, are taking the lead through the publication of its long awaiting Consumer Duty guidance.
- Seven in ten (71%) UK adults have no investments at all.
- Of the 4.1 million UK adults defined as ‘in difficulty’, because they have missed domestic bills or meeting credit commitments in three or more of the last six months.
- Only 40% of UK adults are confident in the UK financial services industry, and only 31% feel that financial firms are honest and transparent.
- One in four (24%) UK adults have one or more physical or mental health conditions or illnesses lasting or expected to last at least 12 months.
The wider risks of failing to identify vulnerability within CX
From an individual perspective, a vulnerable customer may:
- Be exploited
- Be party to poor decision making
- Increase possibility of financial loss
- Not fully understand the full breadth of options available
However, the implications to organisations are far more reaching:
- Damage to the brand and its reputation
- Loss of customers
- Regulatory redress – in severe cases this can result in significant financial loss and the closure of business operations
- Complaints / fines
- Operating in a manner that is out of step with industry peers
It is time to tackle issues of vulnerability within CX
When dealing with vulnerable customers; there are several proven working practices and models that can be applied. All of which are anchored to providing first class and appropriate customer experience and service:
- Industry models such as the TEXAS (Thank, Explain, eXplicit consent, Ask, Signpost) and CARE (Comprehend, Assess, Retain, Evaluate) models are designed to assist with identifying and supporting vulnerable customers.
- Ensuring that internal safeguarding practices and policies are uplifted to reflect the complex nature of vulnerability. This will require all aspects of the enterprise to be involved.
- Recently, there have been several organisations appointing vulnerable customers as representatives; alongside refreshing the mandate of Chief Customer Officer (COO) to specifically look at vulnerability. This includes a re-examination of what vulnerability means to their markets and customer base.
- Advancements in technology can also be leveraged to increase the probability of best outcomes being achieved. This includes voice call recording and advanced speech analytics that can pin-point key words to identify vulnerability.
- Advanced data analytics can also be leveraged to determine patterns of behaviour. The design of customer journeys that fully considers vulnerability and interactions across non or limited assisted channels (e.g., Mobile, Web, Chat and Virtual Assistant) is an emerging are of importance.
- Uplifting the Customer and Employee Experience offering – re-examining what vulnerability exposures are present across organisation and customer journeys across the full lifecycle (and this includes partner)
A UK insurer piloted a revised way of working across its Claims Division. It found that through the application of uplifted working practices they could identify vulnerability in CX and act accordingly. This action reduced the levels of complaints and witnessed an uplift in employee satisfaction.
Closing remarks
Given the relative nature of it, vulnerability is likely to impact us all at some point in our lives. Vulnerability is a complex state of being. Organisations, regulators, and consumers all have a role to play in ensuring that awareness and prompt identification of vulnerability is increased. Concrete and embedded actions must be enacted to safeguard those that are most vulnerable in our society, like Sarah.
Vulnerability is a relative condition, and a one-size fits all approach just does not cut it. It is important that tailored strategies and practices are introduced so that the most vulnerable are protected and supported. Vulnerability within CX must be approached sensitively and according to each individual case. Know your customer, and work from there.