Supporting Customers Facing Financial Difficulty article by Helen Pettifer
Household budgets are stretched and a growing number of customers face financial difficulties. Your firm is obliged to act in the customer’s best interests and to deliver good outcomes for those experiencing financial difficulties. How does that work in practice?
Identifying Financially Vulnerable Customers
The first challenge is identifying financially vulnerable customers. The cancellation or reduction of policy cover, along with monthly payments may flag that a customer is trying to balance the budget. Some will openly disclose this information, however, money is a sensitive issue. As a result, many avoid admitting they are struggling until it reaches a point of crisis, such as missing several payments.
If a customer discloses financial difficulties, thank them for their honesty and acknowledge their situation. Appreciate what it must have taken for them to share this with you.
Let them know that now you are aware, you are in a better position to help them. Focus the conversation on improving outcomes, not the cause of their predicament.
Supporting Financially Vulnerable Customers
When a potential financial vulnerability is detected or disclosed, your firm is expected to be proactive. You have a responsibility to take reasonable steps to contact the customer to inform them of available options and support. Share these options on your website, in phone calls, emails and letters to ensure your message reaches customers in need.
Payment Options – Options could include payment plans to spread costs, switching to lower level cover without charges and payment breaks. These actions can ease financial pressures, rather than escalating them. They reduce the risk of missed payments or cancellations, so you retain customers and they continue to benefit from cover.
Financial Support – Support includes in-house provision and signposting to external organisations. It is important to only direct customers to support that is directly relevant to them and their circumstances. For this reason, undertake research, so you fully understand what is offered.
I recommend starting with StepChange, your local Credit Union and Citizen’s Advice Bureau. In addition, a free, online benefit checker may help some customers to access financial entitlement that they are not yet claiming.
Building Financial Resilience
Your vulnerable customers will have emotional needs, for example, fear of being judged may cause anxiety or anger. Irrespective of the circumstance, it is important to be kind and treat individuals with respect. Your empathy will increase the likelihood of them accepting support.
It is also important to monitor and evidence how your actions are improving outcomes. As a vulnerability consultant and trainer, I’ve seen the difference organisations make through compliance with FCA ICOBS 2.5-IR and Customer Duty guidelines. Is your firm equipped to help customers experiencing financial difficulties?
With thanks, written by Helen Pettifer