Nearly half of UK adults are now classed as vulnerable, according to the latest Financial Lives survey by the Financial Conduct Authority (FCA), prompting renewed calls for financial services firms to take more robust action in identifying and supporting those at risk.
The FCA’s research found that 49% of adults – more than 26 million people – exhibit one or more characteristics of vulnerability. These include poor health, low financial resilience, or major life shocks. For the 4.8 million adults living with serious health conditions such as cancer, multiple sclerosis or HIV, more than half said they struggle to manage their finances or deal with service providers.
The findings come amid ongoing scrutiny of firms’ compliance with the FCA’s Consumer Duty rules, which place fresh emphasis on improving outcomes for customers, particularly those in vulnerable circumstances. The regulator’s own multi-firm review earlier this year concluded that many providers still lack the ability to monitor or respond effectively to the needs of vulnerable customers.
Nick Hulme of the FCA reaffirmed the regulator’s position, stating: “Vulnerability is the lens through which we are looking at firms’ overall implementation of the Consumer Duty.”
Andrew Gething, managing director of MorganAsh – a support services provider that works across both financial services and utilities – argues that the sector can no longer afford to underestimate the scale of the issue or dismiss its relevance.
“When you consider these important findings, it will simply not wash if your firm still says that you have a small percentage of vulnerable customers – or even none,” said Gething. “We know from other FCA research that this is a commonly held view in certain sectors. Just as worrying is that many firms say customer vulnerability is not their concern.”
He added that understanding and responding to vulnerability must become a fundamental aspect of how financial firms operate. “There is a pressing need for all financial services firms to get to grips with customer vulnerability and equip themselves with the tools and technology to make this happen.”
Gething highlighted that causes of vulnerability are wide-ranging – from low savings and income shocks to ill health and relationship breakdowns. The FCA survey reported that one in ten people in the UK has no cash savings, and a further 21% have less than £1,000 set aside. Meanwhile, 1.6 million borrowers have received some form of support from mortgage or credit lenders in the past two years.
MorganAsh’s own data, gathered via its MorganAsh Resilience System (MARS), aligns closely with the FCA’s figures. The platform is already in use across the financial and utilities sectors and provides a systematic method for identifying vulnerable customers, generating a Resilience Rating akin to a credit score.
“With the right technology and processes in place, it’s easily possible to identify vulnerable customers consistently, monitor outcomes and report on findings,” said Gething. “This also provides robust data which is absolutely critical. Doing this, we can not only ensure we minimise potential harm, but also improve on outcomes, identify commercial opportunities and deliver a far better and more personalised service.”
MorganAsh has recently upgraded MARS with enhanced reporting capabilities, allowing firms to benchmark their vulnerability data against both the FCA’s own vulnerability categories and the wider community of MARS users.
