Data on Demand

Members Only | 09/02/22

Members will no doubt be aware of the continued focus by the FCA on the assessment of consumer vulnerability as part of their ongoing Consumer Duty consultation. They have made it clear that more is expected from lenders with a recent survey highlighting 27.7 million adults in the UK with characteristics of vulnerability such as poor health, low financial resilience or recent negative life events.

Having listened to and participated in many discussions over the last twelve months, there seems to be a general consensus that of course this should be taken seriously, but the regulator must assess each lenders approach proportionately and relative to their offering and customer base. There is no one-size-fits-all approach, but data and process should lead the way.

Although some may feel this is a topic that has been talked to death, it is not without good reason given the current landscape. In the wake of the pandemic, lenders, regulators and the government came together to provide unprecedented measures to support consumers through what was an extraordinary situation which very few had planned for. However, moving into the “new normal” it is clear that as that support may be reduced there are some significant challenges.

At Data On Demand we have seen some potentially worrying trends from our own ID.VU data which aggregates consumer loan application data to highlight changes in circumstances. We are also able to map this back to the FCA’s characteristics. The below excerpt highlights some of the statistics and application volumes we saw in October following the raft of changes to government backed support including furlough ending, cuts to universal credit and the end of payment holidays:

• 729,000 individuals making high-cost credit applications
• 92,000 making high-cost credit applications who had not before
• 10,000 making high-cost credit applications to pay household bills
• 6,000 applications from individuals stated as newly unemployed
• 2,000 applications to consolidate debts

These stats highlight customers who are clearly in very difficult circumstances and in need of support. The return to “business as usual” has been something we have all been striving for, but the reality is that we may be much closer to the start than the finish when it comes to identifying and supporting consumer vulnerability.

Absolutely. Many organisations may already have the platforms and process in place to identify customers in potentially vulnerable circumstances and facilitate the required bespoke customer journeys. However, there are now several businesses and offerings that can help create new, or adapt existing processes and platforms to achieve this, such as Aveni, Callminer, Cerebrion and IE Hub.

I’m slightly biased and there is no silver bullet, but yes. We can clearly see from our own data instances of consumers who have recently suffered a significant life event such as loss of employment, income reduction, or a bereavement. We can also identify people who are making applications for high-cost short-term credit to cover bills.

Data like this can help to identify the significant percentage of the population who are in a potentially vulnerable situation, but may not feel able to initiate the required conversations with service providers and creditors. You also have data available on declared vulnerability from organisations such as the Vulnerability Registration Service for consumers who have already made the step to make their circumstances known.

Embrace the data and technology available and make customers a priority within your business, particularly identifying those in vulnerable circumstances who may benefit from additional support. Again, no one-size-fits-all, apply them proportionally and relative to your own offering and hope the regulators do likewise.