38% of mortgage consumers classed as vulnerable – MorganAsh

38% of mortgage consumers have been classed as ‘in difficulty’, according to the latest vulnerability data released by the MorganAsh Resilience System (MARS).

According to the research, firms using vulnerability assessments for Consumer Duty compliance are identifying a large variation in vulnerability across the industry’s key sectors.

Data from MARS is divided into 10 categories – from ‘very vulnerable’ to ‘very resilient’, but for ease of reporting has been summated into three groups: ‘in difficulty’, ‘potentially vulnerable’ and ‘resilient’.

UK firms using the platform have found the highest proportion of consumers ‘in difficulty’ are in the consumer credit sector, at almost half of all consumers (49%).

In the mortgage sector, it makes up more than a third (38%).

Meanwhile, protection has the smallest proportion of customers ‘in difficulty’ at 5%, followed by equity release, which is nearly a quarter.

Given the demographic of later life lending though, equity release has a higher proportion of ‘potentially vulnerable’ customers (43%).

The highest proportion is found in the high-net worth sector, with almost half of consumers (49%), followed by protection (44%).

MorganAsh said that the high levels of vulnerability for credit companies is due to increasing financial vulnerability, while the low levels reported by specialist protection advisers is almost certainly due to pre-selection prior to clients being assessed.

Across all sectors, the mean results reveal that 19% of consumers are classified as ‘in difficulty’, – where it is most likely that some action or adaptation is required.

Nearly half (45%) of consumers are ‘potentially vulnerable’, meaning they are still classified as vulnerable, but the severity is not as great and – as a generalisation – an intervention or change of process is less likely to be needed. In the mean results, just over a third (36%) were found to be ‘resilient’.

It comes as MorganAsh recently revealed that MARS users were reporting a similar proportion of vulnerable consumers as the FCA’s own Financial Lives survey.

Released in 2017, the survey found that around 50% of consumers in the UK have some sort of vulnerability.

This high-level reporting enables managers and boards to quickly understand their customers and the quantities and types of vulnerabilities they need to manage.

Firms using a yes/no approach to vulnerability will have the challenge of understanding how that the 50% of vulnerable consumers is broken down when correlated to outcomes and harms.

Andrew Gething (pictured), managing director of MorganAsh, said: “It is still early days from the introduction of Consumer Duty, but some firms are starting to provide good data on the vulnerability of their customers.

“We should emphasise that our data is representative of the firms we are working with, so should not be taken as gospel.

“While every consumer is unique and each firm will have a different set of consumers, there is real value in benchmarking ourselves across different sectors.

“Worryingly, there is still a huge disparity in views on the proportions of vulnerable consumers at any one time.

“Some firms are still stating that they don’t have any vulnerable customers, even though we are all vulnerable at some point in our lives.

“The recent Dear CEO letter, issued by the FCA, highlighted the prevalence of this view among wealth management and stockbroking firms in particular.

“Hopefully publishing the mean figures will help firms to judge their own figures against these industry norms.”