Mortgage firms using MorganAsh’s digital vulnerability management platform report lower levels of customer vulnerability than the FCA’s wider benchmark, according to new data from the company.
Data from the MorganAsh Resilience System, known as MARS, found that 36% of mortgage customers assessed through the platform were vulnerable, compared with 42% among advice firms and 48% in the insurance sector.
The figures are based on three years of vulnerable customer data gathered through MARS. Across all firms using the platform, the mean proportion of vulnerable customers was 50%, which MorganAsh said was in line with the FCA’s established benchmark.
Mortgage firms also reported a smaller proportion of very vulnerable customers, at 13%, compared with 22% among advice firms. MorganAsh said the difference was largely linked to the age profiles of customers in the two sectors.
The insurance sector, whose customer base more closely reflects the general population, reported 48% of customers in vulnerable circumstances.
The highest level was recorded in the debt sector, where 99% of customers were found to be in vulnerable circumstances, even when financial vulnerability measures were excluded. MorganAsh said sectors with higher scores helped to explain the overall 50% figure recorded across MARS.
The company said the FCA’s 50% headline figure from the Financial Lives Survey remained useful, but firms should also benchmark vulnerability by age and sector when comparing themselves with peers.
After a vulnerability assessment, MARS generates a Resilience Rating, which MorganAsh describes as being similar to a credit score, but for customer vulnerability. The rating uses 10 increments to classify consumers from very vulnerable to very resilient.
The rating is supported by detailed vulnerability data and can be shared across the distribution chain in compliance with GDPR.
Andrew Gething, managing director of MorganAsh, said: “With most firms reporting a proportion of vulnerable customers close to the FCA’s benchmarks, it really calls into question those firms that still say they have few to no vulnerable customers.
“In reality, what they have is a significant data problem – they don’t have the robust data required to know who their vulnerable customers are, let alone what challenges those customers face and the outcomes they receive.
“Given the clear requirements set out under Consumer Duty to identify, monitor, support and report on customer vulnerability, this a clear issue. More recently, the FCA has requested firms consider the impact of the Iran war and hence, firms need extensive data to be able to assess these scenarios.
“While firms will have different proportions of vulnerable customers based on their sector, it’s still important to benchmark ourselves against other sectors and established data points like the FCA’s Financial Lives Survey.
“The findings are a great example of the advancements we’re seeing in digital customer vulnerability management, helping firms to improve accuracy and bring real efficiencies to understanding, monitoring and reporting on customer vulnerability.
“With the right foundations in place, there is the opportunity to unlock the competitive advantage and commercial benefits of being closer to clients, improving and personalising products and services.”
MorganAsh is urging firms to adopt new guidance from the Chartered Insurance Institute on managing customer vulnerability.
The guidance sets out a practical framework for applying Consumer Duty principles and establishes benchmarks for IT systems, vulnerability classification and data infrastructure. It is intended to help firms identify, monitor, support and report on vulnerability and customer outcomes consistently.
MorganAsh said its MARS platform meets the system requirements set out in the new CII guidance. The guide is available to download from the CII.
