Growing guidance – a new baseline

The big development this week was the release, from the FCA, of finalised guidance for treatment around vulnerable customers.

Much of this reflects some of the best practices we already see within financial services and other leading industries, and indeed it was been broadly welcomed by the industry.

However, with this guidance we see more formal regulatory scope for enforcement, at regulated firms in particular. The regulatory compliance bar is raised a little higher once again.

Reading through there are a couple of emerging themes of note.

Identifying vulnerability

The FCA lists vulnerability essentially into 4 categories. Although these align with much of what we have seen before, the highlighting of areas such as digital skills is interesting.

  • Health – health conditions or illnesses that affect ability to carry out day-to-day tasks.
  • Life events – life events such as bereavement, job loss or relationship breakdown.
  • Resilience – low ability to withstand financial or emotional shocks.
  • Capability – low knowledge of financial matters or low confidence in managing money (financial capability). Low capability in other relevant areas such as literacy, or digital skills.

FCA Vulnerability: 4 key drivers

With the recent growth and acceleration of digital journeys during COVID times, really out of necessity as much as desire, much of our lives are now online.

Businesses of course have long had a desire to move service online, it just makes economic sense. COVID has been a perfect push in the right direction. (The UK in fact seems to lead in terms of online shopping, spending more per head than any other country in the world).

However, as with all transformations, there is a clear need to not leave people behind. A 2-speed economy, part of which is economically disadvantaged or left behind, is clearly going to be a concern.

Are we starting to see this being raised here? It is likely an issue that will continue to bubble in the future.

Consequences of vulnerability

The FCA also laid out a series of consequences driven from vulnerability too.

  • Heightened stress levels due to difficult, or different, personal circumstances
  • Increasing time pressures due to additional responsibilities
  • Increasing pre-occupation (‘brain is elsewhere’) limiting their ability to manage
  • Processing power and ability decreasing due to competing pressures, for example due to the side effects, or emotional toll, of receiving medical treatment
  • Lack of perspective especially when experiencing something for the first time, notfully understanding the broader implications; being unable to make comparisons, or see the ‘bigger picture’
  • Changing attitudes towards taking risks; people often become more ‘reckless’ and/ or careless when under stress.

FCA Vulnerability: behavioural and personal consequences of vulnerability

Again all of this is interesting when viewed in light of COVID too. How much potential for vulnerability is there as a result of the pandemic? How much in the future will have been deemed to have occurred?

An end in mind

Product and Service design is clearly going to need to take this into account. How exactly does the design of the current product suite take into account potential vulnerability? How can we ensure access for all? It is raised in the paper too, together with ensuring there is organisational capability to handle the issue.

As always getting ahead of this makes sense, as does designing customer journeys with the end in mind.

Some of is nicely explained in the book Ends, which I was reminded of in a conversation with Joe McCleod this week. It nicely turns design thinking on its head and with all the changes underway could be a useful way to approach this going forward.

Accessibility is after all already a legal requirement in the public sector and whilst there is definitely a moral requirement in the private sector for doing this, there is now also the potential for future legal extension too… it could be a drum that is starting to beat more loudly, one we will hear more as the consequences of COVID continue to crystalise.

Other stories of interest

Have a good weekend everyone…

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