Mark McElvanney, Client Services Director for IEHub, discusses the impact of regulatory changes, the importance of affordability assessments and innovative tools designed to support customers.
Key themes include the integration of benefits assessments, affordability data portability, and partnerships with third-party organisations to deliver seamless support.
The conversation highlights the challenges and opportunities presented by economic pressures and shifting consumer behaviours, while offering a forward-looking perspective on digital transformation and AI adoption in affordability processes.
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Key Takeaways
- Affordability checks are increasingly critical, driven by regulatory requirements such as Consumer Duty and Ofgem mandates.
- Adoption of affordability assessments varies by organisation, with some implementing advanced digital processes while others rely on manual systems like spreadsheets.
- Open banking adoption remains slow, with only a quarter to a third of users opting in, largely due to trust and perception issues.
- Vulnerability identification and social tariff eligibility are becoming focal points in affordability assessments across industries.
- Digital engagement has increased significantly post-pandemic, though digitally excluded groups remain a concern.
- Collaboration with third-party organisations, such as Make Life Better, enables seamless support for vulnerable customers.
- Consumer data shows households are cutting discretionary spending while maintaining essential costs like energy and transport.
- Benefits assessments frequently identify significant unclaimed financial support, averaging over £400 per month for 70% of users.
- Organisations are beginning to implement regular affordability reassessments (quarterly or bi-annually) to reflect changing customer circumstances.
- Data portability is improving, allowing consumers to share affordability assessments across creditors.
- AI and digital tools are being integrated into affordability journeys, though regulatory concerns about decision-making remain.
- Economic pressures are driving a rise in non-traditional debts, such as energy bills and council tax, complicating affordability management.
Innovation
- No Wrong Front Door Approach: Flexible journey options—manual or digital—based on customer preferences to improve inclusivity.
- Partnership Integrations: Collaborations with organisations like Fuel Bank Foundation and Make Life Better streamline vulnerability support.
- Proactive Consumer Engagement: Customers can proactively update affordability data, enabling real-time adjustments to financial plans.
- Advanced Affordability Tools: Decision-support tools integrate forbearance policies to match customers with the most suitable options.
Key Statistics
- Open Banking Adoption: Between 25–33% of users opt for open banking.
- Unclaimed Benefits: Over £400 per month missed by 70% of customers assessed.
- Energy Cost Tracking: Consumer energy spending directly follows the energy price cap curve.
- Manual vs Digital Engagement: Many organisations still use spreadsheets for affordability assessments, despite digital solutions being available.
Key Discussion Points
- The growing role of Consumer Duty and Ofgem’s mandates in shaping affordability assessments.
- Increasing adoption of affordability tests in utility sectors for vulnerability and tariff checks.
- Challenges and resistance to open banking adoption due to trust and perception issues.
- Importance of addressing digital exclusion through alternative engagement channels.
- Benefits assessments as a high-impact tool for improving customer outcomes.
- Expansion of affordability and vulnerability assessments into broader sectors like utilities.
- The rise of data portability to streamline creditor interactions.
- Balancing regulatory concerns with AI-driven decision-making in affordability journeys.
- Economic pressures shifting consumer spending patterns and increasing reliance on essential services.
- Leveraging partnerships to deliver end-to-end support for vulnerable customers.
- Use of real-time customer data to improve service outcomes and financial planning.
- Mapping customer journeys to prioritise high-impact interventions while managing partner capacity.
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