"Of course, firms do need to meet the requirements of Consumer Duty, but that is only one part of the picture."
- Andrew Gething - MorganAsh
MorganAsh has warned that firms treating customer vulnerability primarily as a regulatory requirement could be missing commercial opportunities.
The support services provider argues that, while some firms may have viewed the introduction of Consumer Duty in 2023 as additional overhead or oversight, there is significant commercial value in understanding more about their customers’ characteristics of vulnerability, as better customer insights can help firms make more informed decisions, improve personalisation of products and services, and engage with customers before their circumstances deteriorate.
The latest data from the Money Advice Trust, cited by MorganAsh, puts the annual household spending power of the UK’s 16 million disabled people at £446 billion, while 75% of disabled consumers believe businesses are losing out due to poor accessibility.
MorganAsh says that there are real commercial gains possible from simply knowing more about vulnerable customers, personalising their experience, creating targeted products and simply responding to their personal characteristics.
"We’ve long said that the focus of Consumer Duty and customer vulnerability should be on the carrot and not just the stick," Andrew Gething, managing director of MorganAsh (pictured above), said. "All too often the narrative is around what happens if you don’t, rather than the considerable business benefits of why you should.
"Of course, firms do need to meet the requirements of Consumer Duty, but that is only one part of the picture. There are significant commercial opportunities and clear competitive advantages in understanding customers properly and using your insights to make better decisions.
"Whether that means avoiding an unnecessary decline and pivoting to a different product, retaining a customer who might otherwise leave or identifying a need for a new product, better vulnerability data can give firms a much clearer picture of the people they are serving and create real opportunities for greater personalisation."
READ MORE: Half of Baby Boomers unsure if protection policy covers dementia
MorganAsh also cites figures from McKinsey, which puts the potential revenue uplift from personalisation at around 40%, while other research has found that poor personalisation is a significant driver of customers switching providers.
The provider says it will highlight the commercial impact of good vulnerable customer management through a live case study on an upcoming industry webinar, where one firm’s experience will demonstrate how vulnerability assessment contributed to fewer automatic declines, more approvals and the development of a brand-new product.
The webinar will also look at recent FCA enforcement activity and what firms can learn from it, alongside the revenue opportunities hiding in better data and the case for digital vulnerability management across different sectors. The session will also consider the potential for sharing structured vulnerability data, reducing the need for clients to repeatedly explain their circumstances.
"Through the combination of technology being readily available and fantastic guidance," Andrew continued, "particularly from the likes of the Chartered Insurance Institute (CII), customer vulnerability management doesn’t need to be the burden that firms think it is.
"If a firm can proactively identify a customer’s circumstances, understand them properly and use that information appropriately, they have the ability to improve customer outcomes, while making better commercial decisions too. That is a far more valuable proposition than viewing vulnerability as just a compliance cost."
