New FCA proposals on fair treatment of vulnerable customers emphasise the importance of research
15 August 2019
Last month, the UK’s Financial Conduct Authority (FCA) launched draft guidance for firms setting out key principles for treating customers fairly. It identifies three areas undertakings need to consider:
- Understanding the needs of vulnerable customers
- Building skills and capabilities of staff
- Taking practical action on product/service design, customer service and communications
The FCA guidance recognises that market research can play a key role in both creating a stronger understanding of needs and developing effective solutions.
Vulnerability is inherently complex, driven by a range of factors (such as health, life-events, resilience and capability) that can be transient and overlapping but not necessarily leading to harm. The FCA’s research also shows that half of UK adults are likely to display one or more potentially vulnerable characteristics. However, every firm’s customer base is different, thus requiring different treatment of vulnerability – this inevitably affects the implementation of the new guidance throughout a business.
Against this backdrop, market research helps firms identify which customers require additional focus and what additional action or support is required. It can play a vital role in informing the wider customer experience so that every customer is treated fairly and can inform service design where needs are more pronounced (e.g. when customers face debt issues). The insights it brings can also be key in helping firms navigate sensitivities, using the right language and encouraging disclosure, so that the fear of doing the wrong thing is no longer a reason for inaction.