A diverse approach to treating customers fairly

06 July 2017

Following the Financial Conduct Authority’s (FCA) business plan in April, firms are expected to focus on their approach to vulnerable customers this year. The focus on identifying and improving the treatment of vulnerable customers was the only new priority introduced by the FCA this year. One of the key challenges for firms will be understanding the support that different groups of customers need. For example, what would and wouldn’t be helpful for a customer with a visual impairment, or someone suffering from debt problems? What assumptions do you currently make as a business that could make vulnerable customers feel uncomfortable or restrict their ability to access and engage with financial services?

One way to better understand what vulnerable customers want and need is, of course, to speak to them and gain an in-depth understanding of their experiences with financial services. You could do this in a number of ways, such as through focus groups. But to get the most valuable insight in designing a product or policy, it would be helpful to work with staff who have direct experience of dealing with customers who’ve experienced the personal circumstances and issues you’re trying to relate to - or have experienced these issues themselves.

Which brings us to another regulatory hot topic: diversity. There’s a growing recognition among Government, regulators and industry that firms having diverse staff and boards is not only important to a fair society but good for business too. From 6 April 2017, the Government requires all employers in Great Britain with more than 250 staff to publish information on their gender pay gap. This disclosure could impact firms’ reputations, both with prospective employees and customers. It’s a risk particularly acute to the financial services sector, which has come under criticism in recent years for struggling to improve the diversity of its workforce.

UK regulators have also made it clear that they believe diversity is an important part of a well-run business. Megan Butler, Director of Supervision at the FCA, said in a speech in January that the financial services industry’s ‘white male’ culture isn’t changing quickly enough, and this creates a risk of ‘group think’. Group think is a phenomenon that occurs when there’s a lack of independent thinking within a group, resulting in poor decision making.

The Prudential Regulation Authority (PRA) warned against this risk in a recent consultation paper on the Senior Insurance Managers Regime. It proposed requiring large insurers to have a policy to promote diversity among board members. The PRA argues that boards which are made up of people with a broader set of perspectives and experiences will be able to better identify a wider range of risks and understand their impact. As a result, it says diverse boards are more effective in running businesses prudently.

So vulnerable customers and diversity will be high on most firms’ agendas this year and beyond. Thinking about the two initiatives together makes sense - it should help firms pool resources and get a more efficient outcome. After all, having a truly diverse workforce should not be about meeting a quota – it should be about promoting inclusiveness and making the most of a broader range of skills and experiences. And having a diverse staffing pool should also help firms relate better to a wider range of customers.

To prosper, financial services firms need to broaden their recruitment efforts, to reach candidates that perhaps don’t fit the firm’s historic hiring profile. That means finding other recruitment channels and considering candidates with experience from outside the industry who have relevant, transferable skills. As firms begin to recruit from a broader talent pool, they need to identify what unique skills will add value to the business, and harness that talent to deliver a better experience for their customers. 

To find out more, take a look at our report on financial services’ firms reputation on diversity, and analysis on gender pay gap reporting.

Katy Bennett | Director
Profile  | +44 (0)20 7213 5168
Follow @Katy_E_Bennett

Tessa Norman | Senior associate
Profile | Email | +44 (0)20 7213 2508
Follow @TessaNormanPwC

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