Firms using vulnerability assessments for their Consumer Duty compliance have identified a similar proportion of vulnerable clients as the Financial Conduct Authority’s (FCA) own findings, data from the MorganAsh Resilience System (MARS) has revealed.
MorganAsh, a support services provider to the financial services sector, compared data from UK firms using the MARS platform with that of the FCA’s Financial Lives survey.
It found that in three key age brackets – 25 to 34, 35 to 44 and 45 to 54 – users reported a similar proportion of vulnerable people as the regulator.
In older age brackets – 55 to 64 and over 65 – MARS users reported a significantly higher proportion of vulnerable people, with 83% of over 65s identified as vulnerable – compared with 60% by the FCA.
MorganAsh believes the FCA’s use of ‘over-65’ as a category could contribute to the disparity, especially as many high net worth (HNW) firms record wide variations in age brackets older than this.
The FCA’s Financial Lives survey from 2017 found that around 50% of consumers in the UK had some sort of vulnerability.
Andrew Gething (pictured), managing director of MorganAsh, said that the significance of benchmarking in managing consumer vulnerability cannot be overstated, as identifying improvements and ironing out efficiencies relies on a benchmarking framework.
He said: “If you don’t benchmark, there’s no way to find out how you compare to others, how you can improve performance, spot inefficiencies or determine the best cause of action when changing or updating processes.
“The benefits of using benchmarking to manage consumer vulnerability and compare against best practice cannot be emphasised enough.
“Of course, Consumer Duty is new, so there are few battle-tested benchmarks, and most companies won’t have annual or comparable data to compare with their peers.
“But there is a decent place to start. The FCA’s Financial Lives Survey has provided some good data.”
He added: “While the MARS data will depend on response rates and the make up of each firm’s customer base, this analysis does show that the processes put in place by firms to assess and monitor vulnerability are working.
“Although crude, the proportions of vulnerable customers identified is a very simple measure, and hence easy for firms to report and monitor.
“Far too many firms are still only reporting proportions of vulnerable consumers in single figures and quite clearly their assessment processes are just not fit for purpose.”
To find out more about vulnerability and the implementation of Consumer Duty, including insights from MorganAsh, keep an eye out for the feature in the upcoming print magazine
