Supporting Vulnerable Customers Through the Cost-of-Living Crisis

John Flood

With 50 percent of Britons meeting the FCA’s definition for vulnerability, specialized support becomes increasingly important

Insights
Supporting Vulnerable Customers Through the Cost-of-Living Crisis

“The test of our progress is not whether we add more to the abundance of those who have much; It is whether we provide enough for those who have too little.” – Franklin D. Roosevelt, second inaugural address, 20 January 1937

The America of the 1930s was a vastly different place than it is today. At its height, unemployment hit 25 percent. 5,000 banks failed. Drought and erosion in the agricultural sector created severe conditions dubbed the Dust Bowl, which displaced hundreds of thousands of families from farms. Homeless Americans drifted from rural settings to cities, where they lived in shanty towns, which were little more than cardboard and paper shacks.

Today, the world faces challenges not seen since the days of the Great Depression. War, famine, recession, climate change events, and a volatile political landscape have created conditions in our own communities that threaten to upend millions of people’s lives.

The Facts Are Hard to Ignore

YouGov, an international research data and analytics group, published its findings in its 2022 cost of living tracker report. Inside, many troubling statics came to the fore:

  • One in four Britons says that they are struggling or failing to make ends meet.
  • Three quarters expect the economy to worsen in 2022-2023.
  • Many Britons – 72 percent – expect the economy to be in recession or depression within a year.

The rising cost-of-living has forced eight in ten Britons to cut their usual spending. The dramatic rise in energy prices is behind this hardship. It’s likely to get worse during the winter.

When the economy gets bad, it hits low-income and vulnerable people the most. So, it should be no surprise that YouGov reports that one in four Britons struggle to afford – or can’t afford – essential items. For many, it’s heat or eat.

Defining the Term ‘Vulnerable’

In corporate compliance, the word ‘vulnerable’ has its unique meaning. It is essential to be aware of its legal implications.

The Financial Conduct Authority (FCA) defines a vulnerable customer as:

“Someone who, due to their personal circumstances, is especially susceptible to harm – particularly when a firm is not acting with appropriate levels of care.”

“All customers are at risk of becoming vulnerable, but this risk is increased by having characteristics of vulnerability. These could be poor health, such as cognitive impairment, life events such as new caring responsibilities, low resilience to cope with financial or emotional shocks and low capability, such as poor literacy or numeracy skills.”

The guidance went on to say that more than 50 percent of UK adults meet the definition of vulnerability.

Be Aware of the Vulnerable Customer, Or Face Penalties

For digital businesses, it is not only about supporting non-profit charities. There is also a legal obligation that could have significant financial penalties for not being compliant with FCA guidelines.

In 2020, the FCA fined Barclays Bank and several of its subsidiaries “26 million UK pounds for failures in their treatment of consumer credit customers who fell in arrears or experienced financial difficulties.” The bank faced penalties for “poor treatment of its customers (which) risked making these difficulties worse,” said a director of FCA.

In its announcement, the FCA stated: “A customer under financial pressures could end up making payments on a consumer credit loan at the expense of a priority debt, such as a mortgage, council tax, child support and utility bills.” The agency also said that credit firms must take adequate measures to understand customers’ financial difficulties.

The fair and appropriate treatment of customers experiencing financial difficulty remains a focus for the FCA. Yet, firms should also invest appropriately in their staff who work in collections and recoveries, including training and adequate management information. These steps will allow them to monitor customer outcomes and take appropriate action when needed.

Unfortunately, spotting those who are most vulnerable remains a challenge.

Identifying and Supporting Vulnerable Customers

Traditionally, contact centre agents were left to spot vulnerability on their own. For businesses in highly regulated environments, like financial services, relying on an agent comes with risks.

Thankfully, AI tools can monitor 100 percent of customer conversations and immediately detect clues of vulnerability. These can include phrases like: “My partner used to handle these things,” or asking off-topic questions, and making unrelated statements.

Puzzel lowers the risk that its agents will miss those crucial clues. Indeed, its new voice interaction analytics tools enable companies to take a data-driven approach to customer vulnerability. They can measure stress and sentiment while tracking phrases to isolate specific susceptibilities.

Moreover, someone deemed vulnerable could be routed to agent specialists trained as in-house ‘vulnerability advocates.’ These specialists know how to respond to the spectrum of vulnerabilities and can refer the vulnerable to outside support groups, such as charities and community organisations skilled at dealing with the most vulnerable in society. The training covers a range of vulnerabilities like physical and mental health problems, illiteracy, and socio-economic status.

The stakes are enormous. One phone call to an agent could prevent someone from falling into homelessness, or worse.

When someone is standing on the gyre of vulnerability, one phone call can make the world of difference. It’s critical that agents feel confident in handling these calls, to not only meet regulations but so they feel comfortable in handling such intensely emotive conversations.

 

 


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