Pivotal CII guidance on customer vulnerability management

Every so often, a customer vulnerability initiative comes along which really moves the dial.

The Chartered Insurance Institute (CII) and Personal Finance Society (PFS) have been beavering away for much of this year on something which we think is one of the most useful customer vulnerability tools since the TEXAS mnemonic (a framework for having sensitive conversations), which was created in 2019 and is now widely used.

It’s a new guidance paper, called ‘Supporting vulnerable customers: a practical guide for insurance and personal finance firms’, which is designed to help firms in the insurance sector take the principle-based guidance of Consumer Duty and turn it into a practical action plan.

It’s true that a lot of firms and professional bodies have published their takes on Consumer Duty, but much of this simply rehashes what is in the FCA’s regulations without adding anything new – other than perhaps some clarity. Or, the guidance focuses on one specific topic, such as training, or research, and doesn’t address managing vulnerable customers in a holistic way.

Papers from professional bodies can have a bit of a rep for being ‘guidance handed down from on high’ by non-practitioners, but this paper has been extensively researched and contributed to by Consumer Duty experts, customer vulnerability experts and firms in the sector. It’s also been extensively peer-reviewed, including by the FOS and FCA. It has also received input from many people with lived experience of vulnerability.

So, what’s different about this paper?

• It’s practical: it helps firms go from principle to practice.

• It’s written by specialists who have walked, or are walking, the customer vulnerability journey.

• It avoids repeating information that is already out there.

• It focuses on foundational topics which are important to get right first, if you’re going to avoid expensive wrong turns – by having an objective, nuanced, vulnerability classification lexicon, which is then translated into a data structure that is not only useful it is also scalable and sharable.

• It looks across the whole vulnerable customer journey, not just a part of it.

As one of the UK’s customer vulnerability thought-leaders, MorganAsh is proud to have been one of the contributors and reviewers – working alongside some great professionals in the field and in the insurance sector.

And, while it’s written for the insurance sector, there is little in the guidance that isn’t of value to other financial services firms.

As I’ve said, the guidance is practical, and one of the document’s golden threads is that of data: structure, classification, privacy and so on. While this isn’t an especially sexy topic, it’s the one which I’ve seen most companies get fundamentally wrong – leading to some very expensive wrong turns. Indeed, a lot of vulnerability customer initiatives haven’t taken this fully into account, which means some considerable unpicking later.

If you don’t have the right data structure, absolutely everything else doesn’t work, or takes far too long, costs too much money, or leads to significant issues with reporting, managing vulnerable customers over time and providing evidence to the regulator. Without good data, you don’t have an accurate fix on which customers are vulnerable and in what ways, you can’t help them, you can’t spot issues and rectify them, you don’t have information to help design products and management information is flaky at best.

We are massively supportive of the CII guidance and we urge everyone with a customer vulnerability remit to read it. It will be a great help to you. I’m also open to conversations about it, as I’m sure is the CII. Get in touch for a chat after you’ve read it.

You can download it here.