By Luke Cheadle, Head of UK Operations for The Estate Registry
It is now more than two years ago that the Financial Conduct Authority (FCA) finalised its guidance on Consumer Duty to set a new benchmark for retail financial services customers. The rules came into play on 31st July 2024, from which time firms need to demonstrate, if challenged, that they are acting to deliver ‘good customer outcomes’.
Most of the guidelines deal with the issue of ‘fairness’ and whether firms are delivering ‘fair’ value. There is also a large section given over to the fair treatment of customers, especially in relation to vulnerability. Firms should be aware that some of the services/products they provide could, in fact, create ‘a risk of harm’ to customers with characteristics of vulnerability, and that as a consumer’s circumstances and needs change, firms need to ensure they are acting with ‘the appropriate levels of care’.
In a ‘Dear CEO’ letter from Sheldon Mills, Executive Director of Consumers & Competition at the FCA, to the leadership of the retail banks ahead of the deadline (published in May 2024), the Authority identified various weaknesses that some banks still had in how they identified and dealt with vulnerable people. In particular, it highlighted how there was limited front-line staff training on the needs of customers in vulnerable circumstances, leading to ‘potential inconsistent treatment and a lack of prioritisation’. It also highlighted limited capability for inclusive communications and limited testing of outcomes for customers on specific journeys.
Drivers of vulnerability
Within the umbrella of vulnerability are four key drivers: health; resilience; capability; and life events. Within the latter, bereavement is one of at least seven such events that could result in a customer becoming vulnerable.
An earlier FCA guidance note (Guidance for firms on the fair treatment of vulnerable customers, 2021) that was published at the start of the programme, evidenced best practice in bereavement management, including one bank that had a dedicated in-branch bereavement adviser who helped a consumer cancel all her deceased partner’s Direct Debits.
It also identified worst practice, including a bank that told a consumer, whose partner had recently died, ‘to come back tomorrow’ because ‘there isn’t anyone here who does bereavement today’. As the guidance says, even if specialist staff were not available, all frontline staff should be trained to advise the consumer on how registering a bereavement works and be able to sensitively advise the consumer of their options. ‘Lack of sensitive frontline support’, the guidance says, ‘can lead to disengagement and harm to the consumer’.
Buried deep within the guidance, it states that firms should ensure that they have systems and processes that allow customer service staff to record and access information that will be required in the future to respond to vulnerable consumers’ needs. ‘Consumers,’ it says, ‘should not have to repeat information’.
To that end, it highlights a specific example. It recommends having systems in place that minimise the number of times a customer must inform firms about their vulnerability and references a “tell us once” style process where customers can notify a bereavement – just once.
Death notification
More than three years ago, the FCA was calling out the death notification process as being a key area on which the banks and other financial services providers should focus their attention. Some have realised the positive benefits that services such as NotifyNOW and Settld from The Estate Registry have had on improving customer service, enhancing their reputation, creating greater efficiencies, and addressing a specific Consumer Duty concern. The challenge is that the FCA is only issuing ‘guidance’, and as such there is no obligation for others to follow suit.
Perhaps the biggest challenge of all is one that is also called out in the more recent ‘Dear CEO’ letter. The FCA says that within banks and financial institutions, it is often the case that there is no clear ownership of outcomes for customers in vulnerable circumstances, and poor management/awareness of the issues involved.
Perhaps by making someone directly accountable, and at a Board-level, we can convince others that an efficient and effective death notification service is not only good for business but is also the right thing to do, and make firms compliant with delivering ‘good customer outcomes’.
This article was submitted to be published by The Estate Registry as part of their advertising agreement with Today’s Wills and Probate. The views expressed in this article are those of the submitter and not those of Today’s Wills and Probate.
