FCA vulnerability survey
The FCA has issued a survey on vulnerability, to be submitted by 14 May 2024. Although they state there is no requirement to respond to the survey, they do say they will be following up the survey with a more in-depth piece of work. The results will be collated for wider publication and shared with individual firms’ supervisors.
The format is a questionnaire – and reading the questions gives a strong indication of what the FCA expects of firms. The principles within the questionnaire are all from the Consumer Duty or the FCA’s vulnerability regulations – but having them all in one place will no doubt focus firms’ minds on the regulatory requirements.
Clearly, the questions are wide-ranging, to cover all types of firms including distributors and manufacturers, and many will be over the top for most smaller firms. The key questions are numbers 5 and 8.
It is highly unlikely that any firm will be able to give positive answers to all of the questions, and more likely firms will be responding with ‘still need to do’.
The survey starts with some questions on the type and size of business, then there is a killer question – number 5 – on the proportion of customers identified as vulnerable. The answer ranges are from ‘less than 10%’ to ‘more than 90%’. We know from other work that the ‘vulnerability mean’ for the population is around 50%. We also know that, while firms’ proportions of vulnerable customers vary, anything less than around 30% is likely to indicate that the processes used to identify vulnerable customers will come under question. Therefore, there is a fair chance that the FCA will be asking further questions for anyone reporting less than 30%, which – if recent surveys are to go by – will be the majority (MorganAsh’s MARS users excluded).
Question 8 takes the form of statements, with a selection of answers – typically the range of answers is from – ‘we have done nothing’ to ‘we have taken all steps necessary’.
Q8: To what extent has your firm taken action in each of the following areas?
We understand the nature and scale of vulnerability in our target market and what this means for consumer needs.
We ensure all relevant staff understand how their role impacts on customers in vulnerable circumstances and ensure frontline staff have the necessary skills and capability to recognise and respond to a range of characteristics of vulnerability.
We ensure consumers in vulnerable circumstances and their needs are considered throughout the product and service design process.
We implement appropriate processes to evaluate where we have not met the needs of consumers in vulnerable circumstances and make improvements. We produce and regularly review management information on outcomes for consumers in vulnerable circumstances.
If the answers to the above are positive – then more detailed questions are triggered – if the answers to the above show little activity has been done, then the more detailed questions are skipped.
Q9: In Question 8, you confirmed you have taken action to understand the nature and scale of vulnerability in our target market and what this means for consumers’ needs. Which of the following actions have you taken in order to execute this?
We have conducted our own research into characteristics and needs of consumers with different characteristics of vulnerability (either commissioned externally or conducted by own research teams).
We have worked with consumer organisations to improve understanding, for example through organised training, reviews of customer-facing materials and processes.
We have worked with a consultancy to improve understanding, for example through organised training and reviews of customer-facing materials and processes.
We have held focus groups with consumers with particular characteristics of vulnerability to understand their needs, the challenges they face when engaged with our products and the actions we can take to meet those needs and address those challenges.
We have reviewed and/or analysed internal data and information to understand the characteristics of vulnerability and are likely to be present in our target market or customer base.
We have reviewed external information resources and/or analysed external data to understand the characteristics of vulnerability that are likely to be present in our target market or customer base, and what impacts this may have on consumers’ needs (e.g. resources from charities, resources from trade associations, Financial Lives Survey data).
We have conducted work to understand the potential harms and disadvantages arising from our actions, or inaction, on customers with characteristics of vulnerability.
Firms are unlikely to have used all of these approaches – and indeed, may have used some different methods. There is no right or wrong way in how they have approached the implementation.
Q10: In response to Question 8, you confirmed you took steps to ensure all relevant staff understand how their role impacts on customers in vulnerable circumstances and ensure frontline staff have the necessary skills and capability to recognise and respond to a range of characteristics of vulnerability. To what extent have you taken action in each of the following areas?
We have vulnerability-focused training for frontline staff.
We have vulnerability-focused training for all non-frontline staff in key roles.
We have vulnerability-focused training for all staff.
We have dedicated vulnerability teams that have the skills, knowledge and time to support consumers with complex or specialist needs, as well as offer advice and support to frontline staff.
We share relevant briefing and training materials created by charities and/or trade bodies and/or others with all relevant staff.
We nominate individuals to become vulnerable champions or superusers to provide support and expertise to all colleagues.
We have guidance and/or process manuals to support frontline staff on how to meet the needs of consumers in vulnerable circumstances as part of their day-to-day role (for example, guides that detail indicators of vulnerability and how to respond to these, guides on how to record and share vulnerability).
We have conducted work to understand the potential harms and disadvantages arising from our actions, or inaction, on customers with characteristics of vulnerability.
Q11: What does the training or internal guidance for frontline staff cover?
The different characteristics of vulnerability in your target market and/or customer base.
The needs associated with the different characteristics of vulnerability.
How a characteristic of vulnerability or particular need could result in disadvantage or harm, including as a result of the firm’s actions or inaction and unintended consequences of a firm’s actions.
How to recognise indicators of vulnerability.
How to encourage the consumer to disclose any additional or different need.
Example questions and responses to guide discussions with consumers who may have a characteristic of vulnerability.
How to record information on a consumer’s file around their needs/characteristics of vulnerability.
How to access information on a consumer’s file around their needs/characteristics of vulnerability.
The types of support available for consumers in vulnerable circumstances.
When and how to refer a customer to a specialist vulnerability team.
When and how to refer a customer to a third-party organisation for additional support that cannot be provided by the firm, for example a charity such as Samaritans.
Q14: In Question 8, you confirmed you took action to ensure communications are understandable for consumers in vulnerable circumstances in your target market and/or customer base and to consider the channels you use to communicate with consumers in vulnerable circumstances. To what extent did you take action in the following areas to do this?
We have embedded vulnerability into the design process for communications.
We determine our communication channels, and decisions around opening new ones or closing channels, based on the needs of the customers in our target market or customer base, including customers with characteristics of vulnerability.
We offer additional information to support consumers’ understanding, for example FAQ documents to explain complex terms and concepts, simplified documents which offer infographics and diagrams.
We offer alternative formats of communications to meet the needs of customers in vulnerable circumstances in our target market or customer base.
We offer tailored communications to individual customers where necessary.
We proactively raise awareness of the different communication formats and channels available to consumers.
We ensure communications provide information in plain English, minimising technical jargon.
We provide communications in a timely manner and at appropriate touchpoints in the customer journey.
We ask customers whether they understand the information provided in our communications and offer additional support where they do not.
We use consumer testing to assess whether communications meet the needs of consumers in vulnerable circumstances in the target market.
We employ a third party to review our communications, for example a consultancy or consumer group.
We regularly review the accessibility of our different communications (including the channels offered, understandability of communications).
Q15: In ensuring all communications are understandable to consumers in vulnerable circumstances, do you take any further actions outside of those outlined in Question 14?
Q16: What channels do you offer customers in vulnerable circumstances?
Q17: What alternative formats do you offer customers in vulnerable circumstances?
Providing a means of communicating using BSL or ISL, e.g. through video.
Providing a means of utilising online services and applications using audio options.
Providing means to use Next Generation Text.
Providing the option of communications in colour schemes friendly to people with particular characteristics of vulnerability.
Providing the option of communications in large print.
Providing the option of communications in braille.
Other.
Q18: How regularly do you review the accessibility of your communications?
Q19: In embedding vulnerability into your product and service design process, to what extent have you taken action in each of the following areas?
There are clear policies and guides on how and when vulnerability should be considered in the product and service design process, including in the idea generation stage, development stage, testing stage, launch phase and review stage.
We conduct analysis of potential harms/risks to consumers in vulnerable circumstances as a result of the product and its features, including if features of products or services may exploit consumers in vulnerable circumstances (e.g. reviewing internal data, reviewing external resources from consumer organisations).
We hold focus groups with consumers in vulnerable circumstances or consumer representatives at the development stage to get a greater understanding of their needs and how products can meet them.
We consult with specialist organisations at the development stage of the product lifecycle to understand the needs of consumers in vulnerable circumstances and embed these into the design of the product.
We adopt an inclusive design approach (i.e. designing inbuilt features of the product or service which ensure the needs of vulnerable customers are met, while at the same time benefitting a wider range of consumers).
We have analysed the needs of customers with characteristics of vulnerability in our target market and/or customer base and have introduced products to directly meet these needs.
When there is a proposed change to an existing product or service, product and service design stage must consider the impact on consumers with characteristics of vulnerability.
We have considered and adopted the most appropriate distribution channel according to the needs of the customers in our target market for the product, including those customers with characteristics of vulnerability.
We have features in our existing communication channels to meet the needs of the customers with characteristics of vulnerability in our target market or customer base (e.g. offering call-back options).
Customers have flexibility to exit communication channels to their preferred channel (e.g. existing automated solutions to meet the needs of consumers with characteristics of vulnerability who have different needs).
We have flexibility to respond to the needs of customers impacted by short-term challenges or events (e.g. building in flexibility to offer customers forbearance for a specified period without changing contractual terms when a customer is impacted by a major life event).
We test the impact the product or service has on consumers with characteristics of vulnerability and whether the product meets the needs of consumers with characteristics of vulnerability in our target market.
We review products and services to understand the outcomes for consumers in vulnerable circumstances, including whether there are any consumers with particular characteristics which may be purchasing unsuitable products.
We provide communications in a timely manner and at appropriate touchpoints in the customer journey.
We ask customers whether they understand the information provided in our communications and offer additional support where they do not.
We use consumer testing to assess whether communications meet the needs of consumers in vulnerable circumstances in the target market.
We employ a third party to review our communications, for example a consultancy or consumer group.
We regularly review the accessibility of our different communications, including the channels offered and understandability of communications.
Q20: In embedding the needs of consumers in vulnerable circumstances into product and service design processes, do you take any further actions outside of those outlined in Question 19?
Q22: How regularly do you review your products and services to test whether they are delivering good outcomes for consumers in vulnerable circumstances?
Q23: In ensuring customer service meets the needs of the customers with characteristics of vulnerability in your target market, to what extent have you implemented the following actions?
Establishing or improved existing systems and processes to support and enable consumers to disclose their circumstances or additional needs.
Establishing or improved existing systems to enable proactive identification of indicators of vulnerability.
Establishing or improved existing systems to provide support to consumers with characteristics of vulnerability, including enabling flexibility to meet the needs of consumers in vulnerable circumstances throughout the customer journey.
Proactively inform consumers about the support available to them, including relevant options for third-party representatives and specialist support services.
Establishing or improved existing systems and processes that enable staff to note and retrieve information about a customer’s needs in a way that ensures consumers do not have to repeat information.
Q24: In ensuring customer service meets the needs of the customers with characteristics of vulnerability in your target market, do you take any further actions outside of those outlined in Question 23?
Q25: What actions does your firm take to ensure systems and processes effectively support the identification of customers with characteristics of vulnerability?
We conduct proactive monitoring of customer data (e.g. transaction data) to identify potential characteristics of vulnerability.
We use third-party data or engagement to identify potential vulnerabilities (e.g. data-sharing systems that enable consumers to proactively disclose their circumstances/needs).
We have systems and processes in place that enable staff to record information on a consumer’s characteristics of vulnerability.
We have systems and processes in place that enable staff to record information on a consumer’s needs.
We have in-system prompts during customer interactions to guide staff on how to support the customer.
We have in-system prompts to guide staff when reviewing customer applications and queries.
We have established vulnerability markers on customer files that are regularly reviewed and updated.
Q26: What actions are you taking to identify and support consumers throughout the digital journey?
We have introduced pop-up boxes or prompts where consumers are spending longer over particular text or particular functions on the website, requesting additional help or entering inconsistent information, which offer additional help such as explaining complex terms or signposting to additional resources (e.g. FAQs pages, free advice services).
We have introduced pop-up boxes or prompts where consumers are spending longer over particular text or particular functions on the website, requesting additional help or entering inconsistent information, which offer the consumer the opportunity to speak to a customer service adviser.
We have a dedicated space to enable consumers to proactively disclose their needs or circumstances and this information is then available to relevant staff.
We have an online chatbot that is able to ask questions and record information on a consumer’s needs and/or circumstances, which is then made available to relevant staff.
We have targeted online questions and FAQs or open text boxes at different touchpoints in the customer journey that encourage customers to volunteer relevant additional information.
We do not take steps to identify and support consumers through the digital journey.
We do not have a digital journey and so this is not applicable.
Q27: To what extent have you taken action in the following areas to enable customer service staff to respond flexibly to the needs of consumers in vulnerable circumstances throughout the customer journey?
We have ensured that our culture and systems do not discourage staff from taking extra time or acting flexibly to meet the needs of consumers in vulnerable circumstances (e.g. by ensuring pay and reward structures do not just look at volumes or speed of consumers served but quality of service and outcomes).
We have ensured that processes can be altered where necessary to meet the additional needs of consumers with characteristics of vulnerability (e.g. by ensuring consumers are able to receive communications in their required format).
We have ensured customer service staff are empowered to offer consumers additional time to make a decision or to signpost consumers who could be at greater risk of harm to appropriate help or advice services.
Q28: In enabling customer service staff to respond flexibly to the needs of consumers in vulnerable circumstances throughout the customer journey, do you take any further actions outside of those outlined in Question 27?
Q29: What actions are you taking to proactively inform consumers about the support available to them, including relevant options for third-party representation and specialist support services?
We have introduced straightforward options to enable legitimate and legal delegated access or support, including building in flexibility into options where possible.
During onboarding, we ask consumers to nominate a third party that could make decisions and manage their financial affairs, should the customer be suddenly unable to make decisions in their best interests.
At certain touchpoints in the customer journey, we speak to and/or share information on third-party mandates of authorities and encourage customers to nominate a third party that could make decisions and manage their financial affairs, should the customer be suddenly unable to make decisions in their best interests.
We proactively share information with customers on features or additional support, for example blockers on certain types of expenditure.
We proactively signpost to third-party organisations that can offer consumers additional support (e.g. mental health charities, advice services) across different communication channels.
We proactively share information on the complaints process and offer additional support to consumers in vulnerable circumstances to support their complaint.
Q31: What MI do you use to monitor outcomes?
Complaints from consumers in vulnerable circumstances to the firm.
Complaints from consumers in vulnerable circumstances to the FOS.
Business persistence data (e.g. claims and cancellation rates and details of why customers leave).
Customer feedback directly to the firm from consumers in vulnerable circumstances (e.g. through surveys, focus groups).
Customer feedback through customer review websites.
Quality assurance findings (e.g. through reviews of call handling, complaints handling).
Behavioural insights data (e.g. customer interactions and drop-off rates, usage of communications channels, consumer testing of financial promotions).
Staff feedback, including feedback from frontline staff to understand emerging issues and alternative approaches to address these issues.
Referral and take-up rates of additional support (either in-house or third-party services).
Q33: Where MI suggests consumers in vulnerable circumstances are experiencing worse outcomes than other consumers, do you have a process to identify this and take action to put things right? If so, please provide further detail.
Q34: Based on the MI you monitor, how have outcomes changed for customers in vulnerable circumstances since February 2021?
Outcomes have improved.
Outcomes have remained stable.
Outcomes have deteriorated.
Outcomes for some consumer groups have improved but outcomes for some groups have deteriorated.
We do not know how outcomes have changed.
Q37: How have artificial intelligence and Big Data impacted on your treatment of customers in vulnerable circumstances?
Q38: What actions have been taken to embed the fair treatment of customers in vulnerable circumstances into the culture of the firm?
Establishing an organisation-wide vulnerability policy.
Senior leadership play an active role in reviewing governance arrangements, processes and systems to ensure they support staff to meet the needs of vulnerable customers when carrying out their role.
We have a senior manager responsible for the delivery of good outcomes for customers in vulnerable circumstances.
Establishing formal governance bodies/committees that oversee outcomes for consumers in vulnerable circumstances and have powers to influence and change where there are poor outcomes for consumers in vulnerable circumstances.
Outcomes for consumers in vulnerable circumstances is incorporated into performance metrics for the Executive Committee.
Outcomes for consumers in vulnerable circumstances is incorporated into performance metrics of the Board.
Outcomes for consumers in vulnerable circumstances is incorporated into performance metrics for frontline staff.
Outcomes for consumers in vulnerable circumstances is incorporated into performance metrics for all staff where vulnerability is relevant to their role (e.g. product and service design teams, frontline customer service teams).
Flexibility is built into processes/policies to allow staff to adapt the standard, business-as-usual processes to respond to customers’ needs e.g. taking additional time or flexible steps to ensure their customer understands key information, without being penalised for doing so.
Establishing ways in which staff can share good practice and challenges and escalate issues facing consumers in vulnerable circumstances (e.g. working groups, forums).
Other.
We have not taken action.
Q39: What are the key reasons why you have not taken action in relation to any of the six areas of the Guidance (understanding consumer needs, skills and capability of staff, product and service design, communications, customer service and monitoring and evaluation)?
Q40: What challenges have you experienced in supporting consumers in vulnerable circumstances?
Legacy systems making it challenging to implement changes.
Legacy systems making it challenging for staff across different business areas to identify consumers’ additional needs and provide appropriate and consistent support.
Concerns around the application of data protection regulations when providing support for consumers in vulnerable circumstances (for example, around recording and sharing information).
Financial cost of taking action to provide appropriate support for consumers in vulnerable circumstances.
Limitations experienced in being able to implement changes, associated with firm size (e.g. less feasible or clear solutions as a smaller firm).
We have a schedule of change programmes to be delivered and we have prioritised these workstreams to ensure safe delivery meaning our full vulnerability programme has been challenging to deliver amongst other priorities.
The challenges in understanding the nature and scale of vulnerabilities and how best to take these into account across different business areas.
Other.
We have not experienced challenges.
