INSIGHTS ¦ 2022 Vulnerable Customer Exclusion Report


Summary

The 2022 Vulnerable Customer Exclusion Report highlights the escalating challenges vulnerable customers face in the UK, exacerbated by the cost-of-living crisis, high inflation, and the aftermath of the COVID-19 pandemic. Businesses are called to take urgent, cohesive action to support these individuals, with a focus on using existing tools like the Vulnerability Registration Service (VRS) to identify and assist vulnerable customers proactively.

Key Points

  • Vulnerable customers are increasingly sidelined due to businesses’ failure to translate good intentions into effective support.
  • The cost-of-living crisis and COVID-19 fallout have amplified the number of vulnerable individuals struggling financially and emotionally.
  • Existing mechanisms like the VRS, which allows vulnerable customers to register their status, are underutilized by businesses.
  • The FCA’s definition of vulnerability encompasses mental or physical health issues, life events, resilience, and capability challenges, affecting 45% of the UK population.
  • Financial distress among the general population stands at 16%, jumping to 27% among the most vulnerable.
  • Many vulnerable individuals experience unfair treatment from various organizations, leading to debt, reliance on high-interest loans, and even homelessness.
  • Digital and phone communication barriers significantly hinder vulnerable customers’ ability to access support.
  • Young adults (16-24) are particularly likely to identify as vulnerable, yet often lack the resources or knowledge to seek help.
  • There’s a clear regional and demographic disparity in vulnerability, with income, employment status, and gender influencing perceived vulnerability.
  • The report criticizes industries across the board for not proactively identifying and supporting vulnerable customers.

Key Statistics

  • 27% of UK individuals consider themselves vulnerable, with 45% affected by FCA-recognized vulnerability factors.
  • 16% of the general population and 27% of the most vulnerable are in financial distress.
  • 44% of individuals within the FCA’s ‘vulnerable customer’ category report unfair treatment by organizations.
  • 27% of vulnerable customers struggle with payments; 1.2 million UK adults have turned to loan sharks in the past year.
  • On average, people spend up to 17 hours trying to communicate with housing providers, highlighting the inefficiency of current support channels.
See also  [INSIGHTS]: Reforming the Consumer Credit Act Consultation

Key Take Aways

  • Businesses must proactively identify and support vulnerable customers, using tools like the VRS to ease this process.
  • The rising cost-of-living crisis demands urgent and widespread action to prevent further exclusion of vulnerable individuals.
  • Transparency, empathy, and proactive support from businesses can significantly mitigate the challenges faced by vulnerable customers.
  • Digital exclusion remains a significant barrier for many, underscoring the need for inclusive communication strategies.
  • The young adult demographic is particularly vulnerable, highlighting the need for targeted support mechanisms.
  • Regional and demographic disparities in vulnerability necessitate tailored support strategies to address specific needs effectively.
  • Industries across the board, including energy, banking, telecommunications, and local government, must improve their practices to support vulnerable customers.
  • Sharing data on vulnerability, within GDPR guidelines, can enhance support mechanisms for vulnerable individuals.
  • There’s a strong customer demand for businesses to adopt a more supportive and empathetic approach towards vulnerability.
  • The report serves as a call to action for CEOs and directors to lead the charge in transforming their organizations’ approach to supporting vulnerable customers.

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