UK financial services firms might alienate consumers by indirectly gathering data on their vulnerabilities, MorganAsh’s vulnerability management experts warn.
Consumer Duty requires companies to identify and monitor vulnerable customers throughout the product lifecycle.
Concerns arise, particularly within credit sectors, as some firms use external data sources like credit scores and socioeconomic information without engaging directly with customers.
Andrew Gething (pictured), managing director at MorganAsh, highlighted the importance of direct customer engagement: “Many companies are trying to distil vulnerability data from credit scores or socioeconomic analyses. For example, some indicators of a consumer using gambling websites may be obtained through open banking data. While this may be useful information, it runs the risk of alienating consumers – because the data is obtained through the back door, without their awareness.”
The Financial Conduct Authority (FCA) is reviewing compliance with vulnerability requirements. It has expressed concerns over some firms repackaging existing data and reporting implausibly low numbers of vulnerable customers. This contradicts the FCA’s Financial Lives survey, which found that about 50% of UK adults are vulnerable in some way.
Gething added: “For any organisation managing vulnerability, there is a need to have a consistent way to assess, monitor, communicate and evaluate who is vulnerable.”
