Insights ¦ vulnerability-review-improving-outcomes-consumers-engaging-financial-services-firms

Key Take Aways

1. Customers in vulnerable circumstances, especially with multiple traits, tend to experience worse outcomes, highlighting the need for tailored engagement strategies.
2. Disclosure barriers persist, with only 40% of consumers in vulnerable circumstances voluntarily sharing their needs; communication about benefits of disclosure could improve this.
3. Positive customer outcomes are strongly linked to tailored, personal support that demonstrates genuine care, fostering trust and better communication.
4. Negative experiences, often characterised by standardised interactions and impersonal channels, undermine trust and exacerbate vulnerabilities.
5. Consumers with multiple vulnerability traits report more negative interactions, increased difficulty accessing suitable products, and greater harm potential.
6. Diverse communication channels are valued, but many vulnerable consumers lack awareness of available support options, which can impair their experience.
7. Digital and non-digital support channels need to be designed to accommodate various needs, including social anxiety, mental health conditions, and physical impairments.
8. Barriers such as inability to obtain timely information, lack of clear explanations for declined products, and inability to nominate representatives heighten harm risk.
9. The research highlights complex interactions between vulnerability drivers—parallel paths, root drivers, and vicious circles—that influence harm susceptibility.
10. Trust is linked to the consistency, empathy, and personalisation of interactions; poor communication can significantly diminish trust even within long-term relationships.
11. Adverse communication, especially over the phone or via automated channels, has a disproportionate negative effect on consumers in vulnerable circumstances.
12. The quality of individual experiences influences overall perceptions of the industry, with positive interactions building trust while negative ones cause lasting damage.

Key Statistics

• 40% of consumers in vulnerable circumstances disclose their personal needs or circumstances to providers.
• 25% of vulnerable consumers feel uncomfortable explaining their circumstances to their provider.
• 58% of vulnerable consumers are unaware if support mechanisms are in place to help them overcome communication issues.
• Nearly 6 in 10 (58%) report not knowing if any support exists to help overcome communication barriers.
• 25% of vulnerable consumers have been turned down for a financial product or service they believed suitable, compared to 11% of others.
• Only 50% of those turned down for a product report being given an explanation of why.
• 13% of vulnerable consumers feel unable to do something with a financial product or service, almost double the 7% of non-vulnerable consumers.
• 74% of disclosures are met with responses where providers ask appropriate questions, and 58% where providers make changes.
• 25% of consumers in vulnerable circumstances report negative communication experiences impacting trust.
• 70% of those facing communication issues believe providers offer adequate alternative methods.
• 74% of those who disclose their needs felt that providers asked the right questions.
• 57% of disclosing consumers felt that their provider cared about their circumstances.

Key Discussion Points

• The importance of understanding the complexity and interactions of vulnerability characteristics to improve outcomes.
• The role of tailored, flexible support in fostering trust and positive consumer experiences.
• Barriers to disclosure, including stigma, embarrassment, fear of worse outcomes, and lack of trust, remain significant hurdles.
• Communication channels must be diverse and designed to meet the specific needs of vulnerable consumers, while raising awareness of available support.
• Standardised interactions and automated channels often fail to accommodate non-standard needs, damaging trust.
• Disclosing needs often results in positive experiences where providers ask relevant questions and show empathy, but poor acknowledgment damages relationships.
• Negative experiences, especially over the phone or via automated systems, are more damaging for vulnerable consumers.
• The interaction between multiple vulnerability traits can create a cycle that heightens harm; firms can intervene early to prevent escalation.
• Access to financial products and services is often restricted for vulnerable consumers, compounded by poor explanations for rejections and limited support.
• There is a significant trust-building opportunity through consistent, genuine engagement, particularly in long-term relationships.
• The research underpins the importance of embedding the Consumer Duty by actively addressing identified barriers and tailoring support.
• Better communication and understanding can mitigate harm, improve outcomes, and enhance the reputation and trustworthiness of financial institutions.

Document Description
This article is an in-depth review of the FCA’s recent research into outcomes for consumers in vulnerable circumstances when engaging with financial services firms. It explores the lived experiences of these consumers through quantitative surveys and qualitative interviews, highlighting barriers to disclosure, the impact of interactions on trust, and the importance of personalised, flexible support. The research emphasises the need for industry-wide improvements in communication, product access, and support mechanisms to ensure better outcomes and minimise harm for vulnerable consumers.