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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The grapes of sloth

Another weekend passes and the weather has finally started to get a little warmer, even a few early flowers out. Spring will cheer us all up no doubt, and with lower COVID numbers there are definite reasons for optimism… long may it continue. Observations for the week

  • With some time off I was out on the bike each day. There was some definite kinship with fellow riders as we passed each other puffing up the hills. But, nearly exclusively, it also seemed to be middle-aged blokes, just like me. Is biking some kind of mid-life thing or just I am noticing it more?… I have my suspicions, but continue to record data on this one!
  • This week we also saw the Mars rover landing. What an amazing achievement, great to watch. In searching YouTube for the live stream I lazily also got sucked into a vortex of recommended links, ending up with ‘what happens if you put grapes in the microwave’ – who knew!
  • Workwise, this working at home – holidaying at home thing definitely blurs any work-life separation. It was all too easy to be catching up on work emails mid-week… not sure it is generally a good thing, even if it means a smaller inbox tomorrow!… hopefully can get away next time.

Tomorrow is another week, it all starts again… have a good week everyone

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Half term – half time

Things seemed to slow this week. Maybe it was because it was half term at school or maybe we are just more in a rhythm. Mind you in the wider world there were still a few stories that caught the eye.


First was the eye-watering increase in the price of Cryptocurrency in general and Bitcoin in particular, reaching over $50,000 last week. This has been a 5 fold increase in the last year alone.

Opinion seemed divided between those who thought that this was the dawn of a new age, the new precious asset and those that thought it is in fact a fools gold, a bubble only to crash in price, all ending in tears.

Seemingly Visa and Mastercard, together with Elon Musk and other corporate business appear to be now on board, and the drums of FOMO (fear of missing out) seem to be beating hard.

However, with only 7-10 transactions per second (for Bitcoin) some constraints on growth do seem to be mathematically built-in, although in a world of quantitive easing, there is undoubtedly some allure to an asset that cannot be indefinitely expanded… time will tell no doubt. As for Bitcoin lending, like ‘gold’ lending not something I have heard of much yet… so bitcoin lending a bit off yet I think.

Bank results

This week the bank reporting season was upon us again. It seemed the outlook for loans remains looking fairly grim, with Barclays expecting £4.8bn in unpaid loans due to COVID. Natwest is in a similar position, also announcing that it would close down Ulster bank too.

All of this is happening whilst much of impact of the ground still feels quite muted due to government support. A big crunch still seems on the horizon.

Part of these government support schemes are both CBILS and BBLS (BounceBack loan) programmes. The later was in the news this week. BBLS has a 100% government guarenteed for lenders, and new measures for borrowers were annouced this week, allowing businesses to extend payments in order to “pay as you grow”.

However despite further extensions, payments are due to start in May 2021. It is now starting to become real, and that means at somepoint, likely the summer we will see collections impacts.

In anticipation the Banks, together with UK finance, had discussed setting up a joint collections approach, in order to pool resources and minimise costs. This week this seemed to fall apart, with a couple of banks leaving the scheme.

The pressue is still on cost and cost to process, loans provided on a self certification process upfront and high likelihood of default. This no doubt still causing some concerns and a line from the article this week nicely illustrates the challenge…”Government has provided “recoveries protocols”, which set its expectations for how banks should behave while recovering loans”… the how, which influences the cost, is still being worked on.

Lockdown halftime?

So like just like half term, we seem to be at a hiatus.

Future impacts developments and impacts are coming into clearer view, just not quite arrived yet…. all the more reason to continue to watch closely.

Have a good weekend everyone.

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