Addressing customer vulnerability

The Money Advice Trust suggests categorising vulnerability within a Traffic Light system*:

Green Light: Potentially Vulnerable

If a customer is currently able to manage their finances, make informed decisions, and is not at risk of detriment due to their situation, then they are neither vulnerable nor particularly vulnerable. Instead, they remain as potentially vulnerable. However, in future, this could change.

Customers could, for example, develop an unexpected health condition which affects their ability to earn money (an individual factor) or experience an unwelcome change in their wider circumstances (such as the need to provide regular care to a family member). While the customer may be fine at present, things can change.

Amber Light: Vulnerable

These are customers who are currently in a situation which means they are more likely to experience harm, loss, or disadvantage than other customers. These customers will hopefully be identified as being in a vulnerable situation by a frontline member of staff or adviser, and will also hopefully receive help and assistance to avoid detriment to them. The firm’s aim here should be to return the customer back to the potentially vulnerable category (where possible), although this may take time.

Red: Particularly Vulnerable

These are customers who are currently at a greatly heightened risk of experiencing detriment compared to the majority of vulnerable customers. This detriment could also be far more serious in terms of its negative impact on the customer’s situation, and could be far more imminent. These customers need to be quickly identified by staff or advisers, and action needs to be swift and effective to avoid significant harm. 

*Note that the wording has been adapted to suit the long term savings market.

There are many techniques available to frontline staff to assist them with the identification of potentially vulnerable customers if not disclosed upfront. Techniques such as discussing family background and a previous career can help assess recollection, as do questions about current affairs and historic events. Recording the answers in the clients own words and reviewing them at subsequent meetings will help test this over time.

Impact

Staff should ask what the mental health problem stops or makes it hard for the customer to do in relation to their financial situation.

This helps to provide insight into both the severity of the condition and its consequences.

Duration

Staff should discuss how long the customer has been living with the reported mental health problem, as the duration of different conditions will vary.

This can inform decisions about the amount of time someone needs to be given to retake control of their decisions.

Episodes

Some people will experience more than one episode of poor mental health in their lives.

Firms will need to take such fluctuating conditions into account in their decision-making.

Assistance

Firms should consider whether the customer has been able to get any care, help, support or treatment for their condition.

This may help in relation to collecting medical evidence.

Throughout, firms should keep in mind not only the commercial outcomes they wish to achieve, but also the steps that would bring about better customer outcomes for their health and financial wellbeing.

 

*Note that the wording has been adapted to suit the long term savings market.

Breathe (to focus) – it can be scary to hear something like this, so take a moment to simply breathe and focus your thoughts. You can do this by acknowledging what the customer has said: “I’m so sorry to hear you feel that way. How can we help?”

Listen (to understand) – we always take what the customer has shared seriously, but we also always listen carefully so we can assess the imminent risk of harm. Listen to the customer using verbal nods and recapping key information to show your understanding.

Ask (to discover) – listening is important, but where gaps continue to exist in your understanding about the current situation, you should ask questions to fill these. Example questions could include: “What has led to these feelings?” or “Have you spoken to anyone about how you are feeling?”

Keep safe (from harm) – based on your understanding of the situation, and also your organisation’s policy, the emergency services should be contacted if the customer is at imminent risk of harm. During this, you may need to stay on the line to keep talking with the customer. Reassure the customer that your primary concern is their safety, and that any financial difficulty can be dealt with later. “I’m worried about what you’ve told me – what can we do to keep you safe?”

End (with summary) – once customer safety has been addressed, if it is possible to do so, staff should summarise what has been discussed and agreed, so that the call can end (and any data-recording can begin). “We’ve been talking for a while, but before we finish let me summarise what we agreed and what will happen next...”

Our Customer Experience Team became concerned about a pension scheme member who repeatedly contacted us to request a lump sum payment from his plan which represented a significant proportion of its overall value. This member was clearly unable to understand or action the steps required to withdraw a lump sum, and became distressed that his request hadn’t been followed, despite being talked through the process several times. This member was flagged as vulnerable and one of our Vulnerable Customer Champions was assigned to the case.

We received a call from a third party who claimed to be advocate and carer for the scheme member. This individual advised the member was suffering mental health issues and that the family were in the process of obtaining Power of Attorney. They requested we not pay any further money from the scheme, as the member was unable to make such decisions at this time. As this information was from an unknown source, we took steps to verify the possibility of a POA via the Office of the Public Guardian, who confirmed no such arrangement was in place.

Throughout this period the member contacted us several times, continuing to appear distressed and confused about his withdrawal requests. We issued the appropriate documents again, together with a bespoke letter highlighting the risks of accessing the money, and urging the member to contact their financial adviser for support. We also contacted the servicing financial adviser to flag that the member was experiencing difficulty in accessing their money, and asked that they get in touch with him.

When we received the paperwork back a few days later, the instruction had changed, from a one off lump sum, to an annual income of a much lower amount, which we consider to be a better outcome for the member. We have since also had contact from an independent organisation acting on behalf of vulnerable individuals, who are now working with this member and his family.

A customer made contact with us seeking to withdraw all of the money from her husband’s pension plan (she had power of attorney). It transpired that her husband was terminally ill in a hospice and she also had been diagnosed with cancer and she wanted the money to clear debts.

We made clear that the customer would incur significant tax on the withdrawal and advised that she could be eligible to get the money paid out 100% tax-free if the terminal diagnosis was confirmed. The customer was clearly under significant distress (at one point threatened suicide) which the call handler picked up on.

At one point, it was a three-way conversation between the call agent, the customer, and her husband from the hospice. Taking this into consideration, instead of processing the transaction as requested we reached an agreement with the customer that they would go to the GP with a view to exploring the serious ill health option. The customer has since done this and returned to us.

As it turns out the GP has diagnosed that the customer’s husband has longer to live than originally thought so she was unable to get the money tax free. This case demonstrates that 

there was a recognition of the vulnerability of the customer and a drive to get the customer the best possible outcome, whilst taking their situation into account. The customer made their final decision with an awareness of all of possible options.

An ABI member who also operates in the equity release market, is a member of the Equity Release Council and therefore adheres to the ERC Statement of Principles (See References). Customers are offered the option to drawdown funds as and when required. The firm changed its procedures to a telephone-based drawdown process as opposed to paper-based or online so they can interact with elderly customers and better assess their capability, understanding and provide support where needed. This firm has also arranged staff to attend safeguarding training offered by the local council.

We have record keeping systems in place which allow staff to record whether a client is vulnerable, holds details regarding the vulnerability or disability they may have and records any previous support given to the client that ensures a more sympathetic and tailored approach. Not only does this prevent the client from making repeated disclosures to different members of staff, it enables the firm to handle the customer’s account more effectively. Should the vulnerability be temporary, the system is easily able to be updated.

Thank

• Thank the customer (what they have told you could be useful for everyone involved). E.g. “Thank you for informing me. This will enable us to deal with your account better.”

Explain

• Explain how the information the customer has given you will be used (this is a legal requirement).

E.g. “So you are aware, I will now explain how we intend to use this information.”

Explicit

• Explicit consent should be obtained (this is a legal requirement).

E.g. “In order for us to use this information, I will need your verbal permission to do so. Please could you confirm you are happy to proceed?”

Ask

• Ask the customers questions to get key information to help you better understand their circumstances.

E.g. “Does your mental health problem affect your ability to deal or communicate with us? If so, how?” “Does anyone need to help you manage your finances such as a carer or relative? If so, how? 

Signpost

• Signpost or refer to internal and external help where appropriate.
• Staff should direct customers to a company specialist or third party:

– A debt advice agency or help with multiple debts – NHS 111 for more help with mental health issues – The Samaritans for customers with suicidal tendencies

• Behaviour and talk - staff should monitor a customer’s behaviour and talk for indications of difficulties with:

• Remembering – is the customer exhibiting any problems with their memory or recall?

• Understanding – does the customer grasp or understand the information given to them?

• Communicating – can the customer share and communicate their thoughts, questions and decisions about what they want to do?

• Evaluating – can the customer ‘weigh-up’ the different options open to them?

ABI Rules of Thumb for Retirement Taking Your Money

• Pension Wise is free, independent and impartial. Talk to them to get help understanding your retirement choices.
• When considering your options, ask yourself if you want a guaranteed income for life, a flexible income, a death benefit, or a mix. Be aware, you might not be able to get all three.
• If you take your whole pension pot in one go, or as a number of lump sums, make sure you don’t lose out by putting your money in savings accounts with low interest rates.
• If an investment opportunity sounds too good to be true, then it probably is.
  - Always be wary of unprompted contact or cold calling offering you ‘advice’ on your pensions or investments – they’re likely scams or very risky.
  - Always check the FCA register of authorised financial services firms if you are not sure.
• If you have one, check to see what your pension guarantee offers, as well as what you could get from shopping around.
• If you decide to take more than the 25% tax free allowance from your pension, the amount over the 25% will be added to your total taxable income, and may increase the tax you pay.
• You should consider whether taking your pot as a number of lump sums over different tax years could mean you may pay less tax than if you take it all in one go.

In retirement

• Divide the size of your pot by the number of years between your current age and 88 to get a rough idea of how much you can sustainably withdraw on an annual basis. (This should be reviewed to account for increasing life expectancy, and made clear to individuals that people can live much longer than anticipated).
  - Carefully consider the performance of your investments in retirement before setting a safe, regular rate of withdrawal.
  - Consider whether you could manage by reducing your rate of withdrawal in times of poor market performance.
  - The lower your investment returns are, the lower your rate of withdrawals should be.

Zurich has published a guide to help people put their financial affairs in order, should they become mentally incapacitated. ‘A guide to Deputyship and Lasting Power of Attorney’, outlines what people need to do if they wish to appoint someone else to handle their financial affairs. The guide is intended to help customers in good mental health who are considering putting things in place should they develop mental health problems in the future; customers in the early stage of dementia who are looking to plan ahead for when they become mentally incapable of managing their own finances; and families and carers acting on behalf of customers no longer able to manage their own affairs.

The Alzheimer’s Society offers Dementia Friends Training to financial services staff as part of its Financial Services Dementia Charter. One ABI member has implemented the training as part of their corporate responsibility programme.

The Dementia Friends sessions are hour-long ‘bite-sized’ training sessions, and these sessions have been held at regular intervals over the last couple of years. The training is primarily designed to raise awareness of Dementia, give an idea of what it is like to live with Dementia, and some of the initiatives that people can get involved in. The sessions are delivered by a ‘Dementia Champion’ and an external third party is used to deliver the training sessions.

However, two members of staff are currently in the process of training to become ‘Dementia Champions’ which will enable the firm to deliver the training internally, as well as to their outsource partners, on a more regular basis than they do currently, with the aim that a significant proportion of our workforce will become Dementia Friends.

Furthermore, the local council where the firm is based has announced that it intends to become a Dementia Friendly Village. As part of the firm’s contribution towards that, it is planning to volunteer to deliver Dementia Friends training in the local community. All of this goes toward creating a positive culture towards vulnerability and a workforce that is aware of the issues that can affect its customer base.

LV=’s Retirement Wizard is an example of how online channels can be constructed in a way to allow firms to monitor customer behaviours and protect potentially vulnerable customers from making decisions that could lead to a poor outcome, particularly given the shift towards automation. The checks and balances designed within the Retirement Wizard customer journey can help identify where customers have inputted contradictory data or have demonstrated inconsistent behaviours, which then ‘stop’ or ‘pause’ the process and direct them to call up and speak to someone in person.

Our Retirement Service Vulnerable Client Policy has been in place since 2011. All staff are made aware of the policy when they join the firm and receive refresher training annually. They also have the ability to refer internally where they feel a change to ‘standard’ procedures may be necessary for individual clients or circumstances.

Sun Life Financial of Canada has established 'Vulnerable Customer Champions' in most of their outsource partners. These are in place to champion understanding of the needs of vulnerable customers and how to help them. Their activities include:

• Being a reference point for more acute cases and provide guidance on how to help and communicate in the given situation;

• On occasion, taking ownership of the call or making a call back;

• Engaging with senior management to vary standard processes because of individual needs;

• Maintaining a focus on the needs of vulnerable customers by attending team meetings, reminding colleagues of how to identify vulnerable customers and help and sharing examples of recent support provided.

Aviva has established a ‘vulnerable customer forum’ which meets within 72 hours of a vulnerable customer case being identified to discuss how best to handle the case. The forum is comprised of staff from across the business operating in key customer facing roles or who hold the necessary expertise to deal with such a case, including Customer Service Manager, Legal/Life Technical, Risk and Governance, Financial Crime. Forums are convened across all Retirement Solutions areas including equity release.

Standard Life has established a Meet & Greet policy that has been up running for a number of weeks in both Standard Life House (Head Office) and Dundas House (Customer services).

Around 45 staff have volunteered their time to be made available (on a rota) to support customers who visit with a wide variety of requests. It is estimated that around 50% of these visits are from customers who are viewed as vulnerable.

Staff aim to spend time with these people to better understand their concerns on a 1:1 basis, who can then arrange for staff to provide the most appropriate support to best meet their needs. Staff have found this a rewarding experience, being able to make a real difference by meeting and helping customers face-to-face.

Mrs Gray called to find out more about her pension as she wanted to know what her options were. Call handler Martin took the first call from Mrs Gray, established that she wanted to know more about her retirement options, and proceeded to cover off all the options with Mrs Gray.

Mrs Gray advised Martin that she was partially deaf, was struggling to follow what he was saying and asked if he could speak slowly. Martin adapted his pace as best he could and went over the options, but he quickly realised that this wasn’t working as the customer was still asking him to repeat a lot.

He was concerned that Mrs Gray was not able to hear him properly and hence not able to fully understand her options. Martin wasn’t sure if it was best to continue with the call as the customer was getting frustrated and had now been on the call for over 45 minutes but he wanted to help as best he could.

He referred to his mentor for further guidance. Martin returned to the customer and explained that if she was struggling to understand she could seek the help of a trusted friend or relative who she could authorise to gain further information about her policy and the options available. He also offered to send out a customer intent pack which provided all the information about her options as he felt she may prefer them in a written format.

Mrs Gray thought this would be beneficial and stated she would call back once she had reviewed the intent pack and had spoken with a friend she had in mind. Martin updated the policy notes to confirm he had issued the customer intent pack and that the customer may call back with a trusted friend to discuss further.

Mrs Gray called back two weeks later having reviewed the customer intent pack. She had a few questions she needed help with and asked if her friend could speak on her behalf to get this information.

The call handler Sharon vetted the customer and obtained verbal authority to speak to her friend. Mrs Gray had read about the flexible income option and wanted to know more about this. Her friend confirmed that Mrs Gray was keen to take her tax-free cash but leave the rest invested.

Mrs Gray’s friend was then guided to the relevant forms in the customer intent pack that she would need to complete. Once the call ended Mrs Gray filled out and signed all the paperwork and returned these to request to have her tax-free cash paid out.

Last December, Old Mutual received a request from a customer wanting to withdraw £20,000 as a mixture of tax-free cash and income. It became clear that the customer had been through a sensitive divorce process, where she has been forced to move out of the family home. She had subsequently moved into rented accommodation with her young son and needed the money to pay the rent, otherwise they faced eviction.

It also transpired that she had been recently diagnosed with cancer but had not yet informed her son. The customer was clearly very emotional and becoming desperate due to the impending payment deadline. Therefore the call agent escalated the case to senior managers. Due to a delay with a transfer from another scheme, the senior managers agreed to do everything possible in their power to ensure the customer receives the money as soon as possible.

Old Mutual agreed to accept a charge for a same-day CHAPS payment from the ceding scheme to allow for an immediate payment to the customer. The customer contacted Old Mutual to confirm she had received the money and to pass on her appreciation, particularly given the proximity to Christmas and the fact that she was able to buy her son gifts.

Inspired to make the customer’s Christmas as magical as possible, Old Mutual purchased a Lego set for her son, and a hamper of ‘Lush’ cosmetics for her. Old Mutual sent them out with a card, hand-written by the agent who handled her case. She called back again to offer her thanks: “The money is in my account. Thank you so much for your help and support. You have no idea how much your help means to me. I have had a difficult 2 years and what you have done has made me feel there are good people out there.”

• Check for authority: – if the carer can supply evidence of their authority to act on the customer’s behalf, a more detailed discussion can be arranged once this is received; – if the carer cannot supply this evidence, or needs to share information about the customer now, the following steps should be taken:

• Avoid discussing any account details, making sure to explain to the carer why this isn’t possible.

• Reassure the carer that their concerns can still, however, be recorded as observations (unverified) on the customer’s account, and these can be looked into.

• Explain to the carer that their observations will need to be shared with the customer, colleagues, and potentially any clients. Carers will need to give their consent for this.

• Record the carer’s observations, listening carefully, and ensuring:

• you have checked why the customer is unable to speak directly about these issues (is there, for example, a communication issue?);
• you are clear how the customer’s mental health problem affects their ability;
• you have confirmed with the carer what information has been recorded, and how long these unverified observations will be held on file while they are being checked.

• Summarise the available next steps, which might include:

• you (or a colleague) speaking with the customer concerned to establish if there is a problem, including checking the unverified observations made by the carer;
• the carer discussing with the customer a potential mandate to act on their behalf;
• the carer and customer working together to collect supporting medical evidence.

Sun Life Financial of Canada (SLFOC) recognised that whilst their frontline staff are naturally helpful and supportive they would still benefit from first-hand understanding of the needs of vulnerable customers.

SLFOC identified vulnerability through age and broad mental health conditions as areas to provide initial focus. SLFOC engaged with Age UK and the Samaritans to come and provide targeted training through full day training workshops.

These focused on:

• How to identify vulnerable customers and exploring ways of how best to help them

• Practical sessions for staff to experience what a vulnerable customer would be experiencing through:
 – visual impairment
 – walking outside unaided, the disorientating effect on confidence and activity;
 – hearing loss
 – difficulty in making and responding to phone calls;
 – swollen finger joints and attempting a phone call whilst referring to communication received;
 – traumatic life events and the impact it would have on everyday activity;

• Explore how vulnerable customers’ needs would be different as a result of the above and how SLFOC could adapt its approach

Old Mutual uses recordings of customer calls and shares them as podcasts with staff to demonstrate how to handle certain cases. The practice encourages staff to critique and comment on existing practices, and make suggestions about how to continually improve existing structures. They also give a flavour of how some of their practices and policies may impact the customer and therefore help provide context for future change.

As part of its vulnerable customer work, Old Mutual Wealth have created awareness material that helps our teams to identify where a customer may need extra assistance due to vulnerability.

Old Mutual has also set up a management distribution list, so that while its service to vulnerable customers evolves, it can escalate customers that require additional support for a quick resolution.

One of their Customer Service Centre team received a call from Mr Jones and sent the following escalation through to its vulnerable customers distribution list:

I have had a very distressed customer on the phone this morning, currently has some pension transfers coming into us and requires tax-free cash, one payment for about £24,000 is ready but we are not sending it until Wednesday/Thursday by CHAPS. Mr Jones has been extremely distressed, he has told me his wife left him in December, with no money and kicked him out. He has not seen his children since then and has had no money either to live off. Mr Jones is in desperate need of his TFC so he can start moving on securing private accommodation, have food to live off.He has mentioned a couple of times about committing suicide. I am really concerned for him can we do anything to get at the very least some money to him immediately even if it’s a £100 just so he can buy some food today and the rest can follow in a couple of days."

As the above alludes to, in this situation, Old Mutual’s standard processing terms and timescales would not normally allow for a payment before the scheduled date. However, as this case was identified by the Customer Service Centre and because the correct managers were on the distribution list, Old Mutual were able to make a payment so that the customer received the full amount on that same day.

Furthermore, Old Mutual were able to identify that a further transfer from another provider had just arrived, so were able to send an additional £12,000 at this point too.

In addition to providing face-to-face vulnerable customer awareness training to over 850 frontline staff, all staff are now required to complete in-house online vulnerable customer awareness training modules. Zurich felt it was important to provide visibility and understanding to all staff given the varying level and types of vulnerability present within their client base.

Designed to be thought provoking and interactive, the module is split into three segments:

 - To promote understanding of vulnerability;

 - Understand how best to identify vulnerable customers;

 - How to support vulnerable people - not just within their customer base but within the working environment too.

The module aims to help employees consider the things often taken for granted on a daily basis, against those people who live their lives through a different lens. It also provides an interactive element which raises awareness to the level of vulnerability, and the less visible vulnerabilities that are less well known.

In 2016, The Association of British Insurers (ABI) and the British Insurance Brokers’ Association (BIBA) launched a joint Code of Good Practice to help insurers and insurance brokers recognise and help potentially vulnerable customers, who may need extra support when renewing motor and home insurance policies. The Code is part of the industry’s ongoing work to improve consumer outcomes and to help all customers make the most of competitive motor and home insurance markets at renewal. Under the Code participating insurers and brokers will:

• Ensure staff are adequately trained to recognise and understand potentially vulnerable customers at renewal and be able to offer flexible options to help address needs (where necessary).

• Periodically review legacy policies to, where possible, identify vulnerable customers to ensure they are aware of any more suitable alternative products now available.

• Ask potentially vulnerable customers at renewal if their current policy and renewal terms meet their needs, and make clear the importance of reviewing their cover.

• Consider if additional communication, for example a telephone call, is needed to help vulnerable customers through the renewal process.

• Ensure that the customer’s options, and how they can exercise them, are always clearly set out.

In November 2016, the ABI launched Making Retirement Choices Clear – a simplified pensions language guide, designed to help ensure that language relating to the retirement choices introduced on 6 April 2015 is explained and communicated to customers across the whole long term savings sector in a clear, consistent manner, avoiding technical terms where possible.

Following the implementation of the pension reforms, the ABI identified that the new options and products were being communicated to customers in a number of different ways, with jargon often used. Consequently, customers were often confused about the options available to them leading to an inability to compare products. The adoption of the guide will ensure all customers are able to better understand and engage with their retirement options.

A provider recently had a case where the son of an existing equity release client requested to extract money from the equity of his parent’s home to pay a £64,000 court bill, which had arisen by defrauding another family member. The son attempted to impersonate his father over the phone but was unable to provide any evidence to the adviser that he was the client.

When the clients (the parents of the son) eventually spoke to the adviser on the phone, the adviser suspected they were under duress as they refused a visit of the adviser to the property and would not disclose the reason for the money. The case was referred to an internal panel of senior managers and it was decided that as well as being a risk for the firm, the request was likely to cause significant detriment to the client. The request was therefore declined.

1. Be wary of cold calls and unsolicited texts or emails

2. Check everything for yourself

3. Make sure your adviser is on the Financial Conduct Authority approved register

4. Check the FCA’s list of known scams

5. Steer clear of overseas investment deals

6. Don’t fall for ‘guaranteed’ returns or professional looking websites or brochures

7. Don’t be rushed into a decision

8. If you’re aged 50 or over and have a DC pension, talk to Pension Wise

9. Ask The Pension Advisory Service for help if you have doubts

10.Contact your provider and call Action Fraud if you’ve already signed and think you’ve been scammed.

 

For more information, visit: http://www.thepensionsregulator.gov.uk/individuals/ dangers-of-pension-scams.aspx

1. Reject cold calls

2. Stop sending money

3. Check if a firm is authorised or registered

4. Search our list of unauthorised firms

5. Beware of cloned firms

6. Make additional checks

7. See warnings from abroad

8. Report an unauthorised firm

9. Beware of further scams

10. Beware of fake liquidators

For more information, visit: https://www.fca.org. uk/consumers/avoid-scams-unauthorised-firms.