- Just 4-in-10 vulnerable customers have opened up to their financial services provider about their personal circumstances, new research from the FCA reveals
- A quarter (25%) of vulnerable customers said they felt uncomfortable explaining their situation to their provider, while over a third (37%) cited feeling “embarrassed”
- Disclosing vulnerabilities often leads to better customer experiences, with three-quarters (74%) of vulnerable customers who told their firm about their circumstances saying staff asked the right questions to understand their situation and over half (58%) saying their firm took action to provide the support they needed
- Anyone considering using some or all of their pension pot to buy an annuity risks missing out on thousands of pounds in retirement income each year if they stay quiet about life-limiting health conditions
- Proposed ‘Targeted Support’ reforms set out by the FCA should mean millions of savers and investors, including those who are vulnerable, receive better support when making decisions
Tom Selby, director of public policy at AJ Bell, comments:
“The term ‘vulnerability’ covers people in all manner of situations, from those who face mental health struggles, physical health issues, cognitive impairment or financial hardship. The often transient nature of vulnerability means it can also be incredibly difficult, if not impossible, for firms to spot. While speaking to your financial services provider might be the last thing you want to do when you hit hard times, this research shows that people who do often have a better experience as a result. Firms often have different processes in place for customers with specific vulnerabilities, but these can only be triggered if the firm is aware of your situation.
“For anyone using some or all of their retirement pot to buy an annuity from an insurance company, being honest about any health or lifestyle factors that might reduce your life expectancy is absolutely vital. Being open about a physical ailment with a firm you don’t know might feel uncomfortable, but when it comes to annuities it could result in you receiving thousands of pounds more income each year.
“Reforms currently under consideration by the FCA which will introduce more personalised nudges, known as ‘Targeted Support’, have the potential to drastically improve the help and support millions of people receive, including those with vulnerable characteristics. Firms will design interventions under Targeted Support based on common characteristics of ‘people like you’, utilising data on cohorts of customers to inform the nudge. Being honest about any potential vulnerabilities you have will be critical here too, as the more a firm knows about your circumstances, the better targeted its suggestions will be.
“It might feel a bit ‘un-British’ to talk about vulnerability, but the more open you can be – both socially and with the firms we interact with – the more likely you will get the help and support you need.”
