Fears of bias in customer vulnerability assessments unfounded, MorganAsh data reveals

Fears of assessment bias when identifying customer vulnerability are not only unfounded, but risk delaying progress on both meeting Consumer Duty’s requirements and supporting customers, MorganAsh has warned firms.

According to data from the MorganAsh Resilience System (MARS), there is minimal difference in the number of customers identified as vulnerable between an agent or adviser’s vulnerable assessments, and those completed directly by the customer.

Across the 100 characteristics of vulnerability MorganAsh assesses against, there was a mean variation of just one per cent more by advisers, compared to that by customers directly. Among the most severe characteristics, the variation was even less, with a mean variation of only 0.1 per cent. For over 90 per cent of characteristics, the variation between both methods was less than two per cent.  

The new data, released by customer vulnerability specialists MorganAsh, reveals that any concerns that the method firms use may include bias is unfounded. In fact, Andrew Gething, managing director of MorganAsh, argues that these fears can often lead to delays in assessing customer vulnerability and meeting the requirements of Consumer Duty.

Andrew said: “Despite the clear remit from the FCA and Consumer Duty, firms often delay assessing customer vulnerability because they are concerned about bias in the method used. While our data is not definitive for every type of business, all of our evidence suggests that any concern of bias is far less of an issue than feared.

“Benchmarking data between methods, distribution channels, offices and against the FCA’s own data is the best way to analyse the effectiveness of different methods. In all methods though, there absolutely needs to be a clear classification system to provide consistency in the data and enable meaningful analysis. MARS uses an objective severity range for each characteristic to generate an overall Resilience Rating for each customer.

“This will update with every assessment – and as characteristics change throughout the customer journey. It can be reported against and is shareable throughout the distribution chain, helping to meet the requirements of Consumer Duty and the demands of a regulator that actively wants to see better quality data and greater supervision of outcomes for vulnerable customers.”

MARS data shows that consumers volunteer slightly more mental health, mobility and digital interaction issues, while agents and advisers identify more for carer responsibilities and employment issues.

The MARS data was captured across a two-year period from firms in multiple sectors – including credit, debt, mortgage broking, IFA, wealth management, insurance and building societies. Because participating firms have specific customer groups, the data is not definitive. However, MorganAsh believes that it demonstrates how data can better inform decision making.

Alongside agent/adviser assessments and self-assessment by customers, MorganAsh also uses existing databases of vulnerable people and nurse assessments to identify customer vulnerability.

MorganAsh is a specialist in Consumer Duty and customer vulnerability. The firm launched its award-winning MARS platform to help firms understand and monitor vulnerable customers and deliver good outcomes – as required by Consumer Duty. It is in use across financial services and the utilities sector, enabling businesses to adopt a consistent approach to identifying vulnerable characteristics and generate an objective Resilience Rating – much like a credit score.