Chloe joined us in 2020, having graduated with a 2:1 in Graphic Communication at the University of South Wales. Chloe assists in the design and content creation of new e-learning modules as well as the re-branding of existing courses.
The Covid-19 pandemic has had an obvious effect on the day-to-day lives of everyone in the UK. Many households have seen considerable changes in circumstances; experiencing major life events and/or a significant reduction in their household income. According to the Bank of England, one in five respondents to their 2020 NMG survey (conducted between 6 April and 1 May) suggested they were experiencing financial difficulty due to Covid-19.
Customer vulnerability is a key focus of the FCA. Currently, it defines four key drivers of vulnerability as:
The FCA is particularly concerned with how the impact of Covid-19 might increase vulnerability and affect consumers’ abilities to make reasonable decisions and choices about financial products, going forward.
The regulator has recently released findings from a Financial Lives survey (conducted in Oct 2020) that studied the effects of the pandemic. From a survey of 22,000 UK adults, they found a 15% increase (27.7 million up from 24 million) in the number of UK adults who displayed at least one driver of vulnerability, when compared with figures from Feb 2020.
In particular, throughout 2020 the number of UK adults dealing with low financial resilience increased from 10.7 to 14.2 million and when asked about the future, 1 in 3 said that they expected a further income drop in the next 6 months. It is useful to bear in mind that this survey was conducted in October of last year, before the ‘firebreak’ and current extended period of lockdown were announced, therefore the full impact may not have been truly anticipated.
The Covid-19 pandemic may also be having a greater impact on those with low financial capability. The FCA is reporting a trend of an increased risk of fraud and scams; “phishing scams designed to look like they are from the Government offering Covid-19 financial support, from the NHS Test and Trace service, or from TV Licensing offering six months of free TV licence because of the pandemic”.
Additionally, with the pandemic acting as a catalyst for a cashless society and an increase in digital banking, low financial capability individuals may face further difficulties in the future.
Covid-19 will likely have a long-lasting effect on customer vulnerability and the FCA is expected shortly, to finalise its guidance on how firms should treat vulnerable customers. This means the training of staff to be capable of dealing with vulnerable customers and being sensitive to their issues may be more pertinent than ever.
You can find out if you are compliant with the latest FCA guidance on vulnerable customers, as well as many other key regulations, by signing up to our FREE Regulatory Horizons Audit at - Gap Analysis | RWA Consultancy
Additionally, for help with staff training, CPD courses on vulnerable customers are available on our Development Zone e-learning platform.
As always, if you require any advice on this matter please get in touch with your Regional Business Manager or contact us at – Email: email@example.com Tel: 01604 709 509
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