Defining vulnerability and ensuring staff understand and apply the definition has long presented a challenge to firms.

One of the Financial Conduct Authority's (FCA's) main observations, in its occasional paper (number eight), was an acknowledgement that vulnerability is difficult to define and that currently firms apply a range of definitions.  It concluded that vulnerability itself is a very fluid, changeable state but for some individual consumers it can indeed be a permanent state. Nonetheless, it made clear that the firms need to work around these difficulties as access to services for all consumers is seen as central to core conduct.

We explore some of the challenges a firm may face when implementing a vulnerability definition across an operation.

The challenge in defining vulnerability

What may or may not be considered a 'state of vulnerability' is a difficult question because there are many ways in which a consumer may become either temporarily or permanently vulnerable. What complicates the matter is that a consumer may – entirely reasonably – be unwilling to accept that they might be considered vulnerable.

It is likely that, to correctly assess a consumer's vulnerability, a firm will have to consider a series of clues and cues before reaching a conclusion. This can only be achieved by a proactive attempt to discuss the matter with the consumer to understand their circumstances.

Vulnerability may take various forms:

  • Needs-based, e.g. a consumer has disabilities, learning difficulties or language barriers which mean that they may face obstacles in making a complaint or understanding the response.
  • Events-based, e.g. where a consumer's circumstances have changed and they may need additional assistance – which may only be temporary, e.g. a consumer suffers ill-health or is going through a relationship breakdown.
  • Environmental, e.g. a consumer's entitlement to benefits changes, lack of access to local health services, and the costs associated with these sorts of changes.

The FCA's approach

The FCA's stated purpose is to put consumers at the heart of firms and, similarly, the Financial Ombudsman Service (FOS) has published various insight reports focussing on consumer topics more likely to affect vulnerable consumers, including payday lending and fraud.

In this environment, firms can expect the onus to be on their ability to react to consumer need and demonstrate flexibility. The FCA has specifically noted the dangers of exclusion due to a "computer says no" approach to services and recent FOS decisions around matters such as age discrimination have made clear the need for firms to move away from binary decision-making in relation to consumer-facing services.

Beyond theory – best practice for assisting vulnerable consumers

It's clear that putting this into context isn't necessarily easy. Consumers may be unaware they might be considered vulnerable – and may take offence at the suggestion. What's certain is that firms need to facilitate open communication with their consumers and have staff that better understand the circumstances of consumers, which in turn will help firms find more creative and sustainable resolutions for individuals.  

What this means in practice is developing increased flexibility in written and verbal communications and finding solutions which can adapt to the needs of consumers – for example, using new technology including video calling or webchat. It might also mean empowering front-line staff to do more to resolve complaints at the outset – for example, by setting up face-to-face appointments in the customer's local branch.

How could firms put this into practice?

The answer isn't as simple as rolling out general training for front-line staff or asking specialist teams to take charge of all vulnerability-related complaints – which will not address the question about how your vulnerability definition works. Instead, firms may want to consider specialist training to help front-line staff identify potentially vulnerable complainants, backed by a robust system for escalating enquiries and information to specialists for practical assistance. These experts can then either help the case handler resolve the issues themselves or make the decision to escalate the case.

By directing enquiries to specialists for assessment, data can be gathered on the types of consumer issues being raised on a regular basis and helps leaders develop a clearer picture of their consumers' vulnerability-related needs.

It also allows firms to develop a flexible and individualised approach to assessing consumer need. Over time, this escalation approach can lead to a positive feedback loop between the experts and the front line, meaning that information and best practice is shared and expanded, leading to an overall improvement in quality.

At the root of the solution is finding approaches which fit to consumer need, rather than asking consumers to fall into the expected categories. In an industry which is constantly evolving, designing services for the ideal consumer risks pushing out those who – for whatever reason – don't fit into the mould.

Open, clear and honest conversations will help firms to understand each consumer better, and might well work to identify and build new 'best practice' led by individual consumers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.