The Heart of the Matter

Why dealing with vulnerable people isn’t about compliance, it’s about empathy and human interaction.

The Heart of the Matter

11 Feb 2019

David Ryder

Earlier this month I attended the JUST. Retirement Leaders Annual Summit. The topic for discussion was Vulnerable Clients and it was a refreshing and enlightening experience.

Generally, the Financial Services industry gets a bad press, and not without good reason. Yet, here was a room full of business owners, decision makers, influencers and regulators (Financial Conduct Authority and Competition and Markets Authority) who were putting empathy and the genuine needs of other human beings well ahead of any commercial gain or advantage.

Throughout the day there was a tangible shared interest in getting under the skin of what vulnerability means, acknowledging that people at all stages of life can be vulnerable, identifying the different ways in which vulnerability can manifest itself and recognising the need for different approaches in order to manage and deal with vulnerable customers effectively.

For anyone with a slightly more cynical view of the world, you’re probably thinking “Here we go again. TCF take two! Or TVCF!!” But, before you drift away from reading this, please take this thought with you.

The world is changing.  ‘Creative’ is steadily pushing aside ‘Autocratic’ as the desired leadership model. The population, led by Generation Z, is increasingly choosing products and services from companies that demonstrate diversity and altruistic values (you only need to look as far as the recent Lloyds Bank ‘horses on the beach’ advert for evidence of financial services businesses recognising this). Successful companies will be those that are considered thoughtful and all inclusive, and at the heart of this inclusion is dealing with customers/consumers/clients (whatever you like to call them) as PEOPLE.

People can be tough. People can be sensitive. People can be bold. People can be shy. People can be worried. People can be scared…and no two people are the same. Because of this, if companies and organisations are to fully succeed and flourish in the future, then perhaps there needs to be some different thinking?

It’s all well and good ensuring that your firm has the appropriate systems and controls in place to meet your regulatory requirements and operational needs, but how does this meet the needs of your diverse target audience? Will those processes apply to everyone? Would you expect all the people you serve to fit in with your way of doing things? OR… Do you think outside of the box? Do you instil a culture that empathises with the fact that people hit different hurdles and experience different emotions in life at different times? Do you readily recognise and allow for the fact that we can all be vulnerable at some time or another?

For example, aside from the ‘traditional’ vulnerabilities such as old age, physical impairment or mental illness, do you recognise those people who are recently independent or self-employed? What about the person that has recently joined the civilian population after a career in the armed forces? Or the individual who has recently become responsible for dealing with a large inheritance? All are potentially vulnerable in their own way.

The FCA started this conversation a few years ago now, and have made it clear since then that “We will take any exploitation of vulnerable consumers very seriously, including using the toughest enforcement action open to us.”  To help encourage shifts in behaviour, expect to see more focussed FCA guidance on vulnerability later in 2019, including more practical examples and further clarity of what ‘good’ looks like. Expect the FCA to also actively look for your firm to have in place a robust and fluid vulnerable customer policy.

But this shouldn’t be about (re)acting because we fear a big stick from the regulator. This should be about empathy, human interaction and setting the ethos and culture correctly at the top of your company, making sure the ‘Butterfly Effect’ is a positive one.

The sooner we start to get to the heart of the matter, by firmly embedding this thinking within our firms, the better. By consistently designing financial products and advice journeys for people as opposed to consumers, and by accepting that the main driver for this is not compliance, but a deep sense of this being the right thing to do on a human level, then the more positive the perception will be of the financial services industry. And, who knows, maybe, just maybe, the advice gap we hear so much about, may become that little bit narrower.