Training frontline staff and advisers to identify and manage vulnerabilities is not enough to meet the upcoming Consumer Duty regulations, a leading vulnerability expert has warned.
Andrew Gething, managing director of MorganAsh argues that it’s not only a massive undertaking to train all staff, but unrealistic for advisers to remember all the information required. He says the MorganAsh Resilience System (MARS) has identified more than 400 variations in characteristic and circumstance that can lead to consumer vulnerability.
In addition, Andrew highlights the number of mitigating strategies and organisations to signpost to such as local and national providers and charities for health, powers of attorney, debt and domestic abuse.
Andrew believes the way legislation is presented is partially to blame. The original vulnerability guidance (FG 22/1) promoted one-to-one assessment for consumers purely on a reactive basis. However, Consumer Duty now upgrades this, requiring the proactive assessment and monitoring of all customers over the lifetime of the products. Firms are also required to maintain evidence of all these activities to demonstrate to both their board and to regulators.
Andrew Gething said: “When the training requirement is understood and the amount of training is quantified, it becomes abundantly clear that training brokers and advisers to remember all of this is a massive undertaking and in practice unrealistic.
“Many advisers and brokers will say they’ve been supporting vulnerable consumers all their professional life. While this is undoubtedly true, Consumer Duty has changed the parameters on the scope of vulnerabilities we need to consider, the evidence we need to keep and the actions we must take. We are no longer just concerned with financial vulnerabilities, but all potential issues including health and lifestyle, domestic abuse, divorce and learning difficulties for example.
“This is where technology will play an essential role in overcoming this apparent training overhead and compliance shortfall. Systems such as the MorganAsh MARS system can identify vulnerabilities, keep records for evidence and make recommendations on the suitable treatments. The information is provided to advisers at their fingertips when they need it.”
MARS enables firms to provide solutions based on a personalised understanding of individual client circumstances. Instead of each adviser undertaking a subjective assessment, MARS produces a consistent outcome through its objective ‘Resilience Rating’ – much like a credit score. This removes the need for extensive training on how to handle and record vulnerable characteristics or what is appropriate to record for compliance purposes.
Joining calls from MorganAsh, Chris Jones, director of eLearning at VCX said: “Not only is training not enough, it can be counterproductive. Saturating frontline staff with content about consumer vulnerability and tasking them to hold deeply emotional conversations creates a heavy burden that they are not skilled to carry. This can be a detriment to wellbeing and contribute towards attrition. The provision of toolkits and applications like MARS that assist the triage and recording of vulnerability data are essential in balancing the needs of consumers, colleagues and regulators.”
Carolyn Delehanty, a vulnerable customer experience expert at Delehanty Consulting added: “Firms need to think culture not compliance when they’re implementing the Consumer Duty. Recent high profile cases of the mistreatment of vulnerable customers shows how, despite training, individuals or groups of individuals can worsen a customer’s vulnerabilities. Firms need to be looking at how their employees are incentivised and the suitability of their key performance indicators and the behaviour they drive. Products and services need to be designed for the needs of vulnerable customers and implemented across the channels vulnerable customers prefer to use.”
The warning comes as firms prepare for Consumer Duty which comes into force later this year. By the end of April 2023, providers must complete all necessary reviews and inform advisers. Firms must then ensure all products in open books comply by July 2023, and all those in closed books by July 2024.