AI-generated vulnerability claims drive rise in financial services fraud, MorganAsh finds
Andrew Gething said: “While we mustn’t rule out those using AI to assist with communication or overcome barriers to engagement, we have to be vigilant."
MorganAsh warned of a rise in artificial intelligence (AI)-driven customer vulnerability fraud in financial services, urging firms to toughen up their processes and move past reactive approaches.
The support services provider reported that more firms in the credit sector had seen customers using AI-generated claims to avoid or delay debt repayment.
These claims often came as structured, legally articulate correspondence, complete with references to the Financial Conduct Authority’s (FCA’s) legislation, which MorganAsh said had signs of being generated by AI.
MorganAsh found that it was hard for firms to dismiss fraudulent cases without clear evidence from prior vulnerability assessments.
The company said the trend could spread across wider financial services as awareness of consumer duty and vulnerability regulation increased.
With generative AI tools becoming more accessible, MorganAsh backed the FCA’s call for firms to take proactive steps in identifying and managing customer vulnerability.
MorganAsh stated that a reactive approach not only risks poor outcomes for consumers, but also leaves firms exposed to fraud through under-detection.
Concerns were raised about firms only recording vulnerabilities when issues were deemed serious.
MorganAsh said firms without evidence from earlier assessments are at a disadvantage.
Additionally, the company noted that firms relying on passive sources like credit and financial data, or reactive tools such as call centre voice analytics, are especially at risk.
Andrew Gething (pictured), managing director at MorganAsh, said: “It is unfortunate to hear of an increase in potentially inaccurate claims of vulnerability, although we can understand the acceleration due to AI.
“While we mustn’t rule out those using AI to assist with communication or overcome barriers to engagement, we have to be vigilant of vexatious claims.
“Firms that have adopted a proactive approach to customer vulnerability management are well-positioned to rebuke fraudulent or inaccurate claims.”
Gething added: “By engaging with customers proactively and recording assessments at the earliest opportunity, firms hold clear evidence of what was disclosed and robust records of characteristics which can be provided as evidence in the event of any future claim.
“The bar for defending these types of claims is much higher than required for consumer duty reporting, which means firms need robust systems and frameworks in place.
“That is ultimately where technology and digital customer vulnerability management continues to deliver real advantages.”
He said: “Adopting a digital approach means firms can strengthen evidence frameworks without distracting from the priority of identifying and genuinely supporting those customers who are truly vulnerable and ensuring they receive the right outcomes.”
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