AKG has announced the publication today, of its latest industry research paper – ‘Protecting the vulnerable: Navigating the evolving regulatory landscape in a post-pandemic world’ – which explores key issues relating to vulnerable customers and financial wellbeing. It’s a timely release given the rapidly approaching commencement of the new Consumer Duty rules at the end of July.
Research for the paper found just 17% of consumers believe the financial services market provides adequate resources to support decision-making when customers are vulnerable while a third admit to making poor financial decisions in the past two years.
It found advisers are changing their views on vulnerability, nearly two out of five (39%) say it has evolved to consider mental health, and seeing changes in client behaviour, 46% say they have seen clients taking more money out following the pandemic and cost of living crisis.
Nearly half (47%) would welcome support from providers on preparing for Consumer Duty and vulnerable customer requirements with 55% valuing support on identifying and supporting vulnerable customers and 50% training to help identify and service vulnerable customers.
Matt Ward, Communications Director at AKG, said: “Providing valuable support to vulnerable customers is a crucial challenge for financial services to tackle and given the impact of the pandemic and cost of living crisis it is evident that approaches will need to evolve as more people are potentially identified as being vulnerable from a financial standpoint.
“Ensuring more customers can achieve positive financial outcomes should be on the mind of everyone with Consumer Duty in the air, but we’ve got to consider how this is done inside and outside of the advice bubble of those who are able to/not able to access professional support.”
AKG’s paper focuses on consumer views and seeks to understand the impact of the past two years while assessing confidence levels and concerns when it comes to managing finances. It looks at adviser understanding of, and readiness for, the FCA’s vulnerable customers framework as well as awareness of how this fits the FCA’s Consumer Duty.
Some key highlights from the adviser research survey include:
Vulnerable customer framework preparedness
66% are well prepared – we have really focused on developing our firm’s capabilities in this area, including a formal vulnerable customer framework
31% could do better – we have spent some resource/time on this but need to do more
3% are unprepared – we really haven’t devoted enough resource/time to this yet. Consumer Duty requirements preparedness
52% are well prepared – we have really focused on developing our firm’s capabilities in this area, including a formal Consumer Duty framework
37% could do better – we have spent some resource/time on this but need to do more
11% are unprepared – we really haven’t devoted enough resource/time to this yet
AKG’s paper examines adviser definitions and perceptions of vulnerability given the impact of COVID19 and the ensuing period of economic challenge brought about by inflationary pressures.
And it seeks to establish what the industry is doing to better identify, understand and serve vulnerable customers in future in its attempts to ensure both compassionate service experiences and positive customer outcomes.
Jackie Boylan, Head of Fidelity Adviser Solutions:
“Through the context of the tough times and uncertainty of the past two to three years, this research shows how we need to continue to place advisers and their customers at the heart of our businesses. It is clear that we are making good strides in prioritising support for vulnerable customers and their financial wellbeing, and it’s reassuring to know that, as an industry, we are aligned in what we think is most important.”
Dimpel Patel, Head of Client Services, RBC Brewin Dolphin:
“Consumer Duty is a significant and unique opportunity to challenge all business functions to focus on the needs of all customers, and the depth and range of their needs. If, as an industry, we develop a progressive focus on how we demonstrate positive client-centric values, we are convinced that this will continue to improve outcomes for all clients.”
Chris Hudson, Retail Intermediary Managing Director at Standard Life:
“The issues of financial wellbeing, financial education, and vulnerable customer all play to the strengths of advisers and how they’ve been serving clients over many years. But they can’t be left to tackle this alone. The solution lies in a collective response from providers, regulators, educators, and advisers, all working to close the advice gap and empower clients. More needs to be done, so that financial wellbeing is at the centre of advice and guidance in the UK.”
Now available to download at https://www.akg.co.uk/downloads, the paper is sponsored by Fidelity,
RBC Brewin Dolphin, and Standard Life.