Assessing Customer Needs – Considering Vulnerability

The Insurance Distribution Directive (IDD) requires insurance intermediaries to have the minimum necessary knowledge of assessing customer needs. On the face of it, this means identifying what it is that a customer requires by understanding their current level of insurance knowledge and gathering the relevant information from them.

But assessing a customer’s needs is about more than information gathering.

It is a complex area and considering the needs of vulnerable customers is an important aspect for firms to consider.

Consumer vulnerability has been a focus of the FCA for some time and they ‘plan to consult early next year on guidance for firms on the identification and treatment of vulnerable consumers’.

There are a variety of criteria that might mean a customer is vulnerable and it is the responsibility of staff to recognise when this is the case – the customer might not actually identify themselves as vulnerable, which can make the situation more complicated and adds to the complexity of assessing their needs.

Financial services staff are not expected to be experts in handling all of the various forms of vulnerability they might encounter – but being able to identify situations where there is a problem is beneficial.

Examples of vulnerable customers might be:

  • Customers with dementia/Alzheimer’s
  • Customers with learning disabilities
  • Customers under the influence of drink and/or drugs
  • Customers whose first language is not English
  • Customers with mental health problems (i.e. depression, anxiety, bipolar disorder)
  • Customers with low literacy and/or numeracy skills
  • Customers who are inexperienced financially
  • Customers who have had a change in their circumstances (i.e. recently bereaved, going through a relationship breakdown)
  • Customers with a low income or who are in debt

As demonstrated above, vulnerable customers are often those who cannot make rational financial decisions or understand the implications of the decisions they make.

How can firms approach this?

Having a robust vulnerability strategy should actually benefit all customers in that it should promote inclusion and the use of accessible services for all. 

A strategy might include:

  • Providing flexible services – allow staff a certain level of flexibility (i.e. using their judgement) when dealing with a customer’s individual problems and giving them the power to resolve some issues themselves.
  • Training – ensure that staff receive the training required to recognise vulnerable individuals, understand what their needs might be and be able to offer solutions.
  • Understanding of relevant legislation – provide training on legislation relating to consumers, such as the Equality Act 2010 and GDPR/Data Protection Act 2018.
  • Contact methods – provide numerous contact methods to suit a diverse range of customer needs (i.e. by email, telephone, post or in person). Any telephone numbers provided should also be considerate of a customer’s economic situation and ideally be low-cost or free.
  • Accessibility – any communications that are sent out to customers should be in an accessible format, with consideration given to individuals that may be sight or hearing impaired, or have low literacy skills or mental capacity.
  • Understanding and empathy – promote a culture where staff recognise their position of responsibility as a first point of contact and aim to understand and empathise with vulnerable customers, rather than fearing ‘difficult’ conversations where a customer may be distressed. Building knowledge of potential vulnerabilities and undertaking appropriate training will mean staff are better placed to do this.

Remember that a customer’s vulnerability may be worsened by a poor, complicated or confusing customer service experience, whether this comes from frontline staff, inappropriate communications or inflexible procedures. All areas should be considered when a firm develops its approach to dealing with vulnerable customers.


About the author

Lisa joined RWA in 2014 as an e-Learning Assistant, designing training material for the Aviva Development Zone learning platform.

Her role as Professional Standards Manager involves the creation and review of e-learning content as well as providing proofreading, copywriting and standards support across the business.

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