Customer Vulnerability in Australia – What Next for the Financial Services Industry?

Recent figures might show that the unemployment rate in Australia is falling, even despite the end of the job keeper wage subsidies, but that doesn’t mean it’s good news all around. According to research by the Melbourne Institute carried out last year, the proportion of Australians vulnerable to financial stress was above 50% throughout all 13 waves of its survey, suggesting that customer vulnerability is a real growing concern.

Even before the global pandemic, the Financial Services Royal Commission, the Productivity Commission and several Parliamentary inquiries had highlighted the issue of vulnerable customers in the financial services, insurance and superannuation sectors. Financial Resilience Australia reports that more than two million Australian adults have low financial resilience, experiencing severe to high financial vulnerability, a figure that’s only set to get worse following the events of last year.

What Does This Mean For Australian Financial Services?

Vulnerability isn’t directly regulated for in Australia, unlike in the UK, where the Financial Conduct Authority (FCA) has recently published guidance on ensuring the fair treatment of vulnerable customers. The design and distribution obligations put in place by the Australian Securities and Investments Commission (ASIC) do go some way to addressing vulnerable customers, and its Interim Corporate Plan 2020 – 21, released in June 2020, acknowledges the increased risk and impact of customer vulnerability in the context of the global pandemic.

All this suggests that ASIC has vulnerability considerations front of mind, which could very well lead to more targeted guidance and even regulation. But, regardless of regulatory requirements, financial services organizations have a duty of care to ensure vulnerable customers are treated fairly. This isn’t only for ethical reasons and to uphold their corporate social responsibilities, but to deliver customer experience excellence, which is a key component in nurturing customer loyalty, which builds valuable, long-term relationships and potentially willing customer advocates for your brand.

In light of this, what are the key points that financial services businesses should be considering when it comes to customer vulnerability?

Identifying Vulnerability is Key

One of the main stumbling blocks to treating vulnerable customers fairly is how to identify them in the first place. Although some may willingly disclose their vulnerability, some may choose to conceal their vulnerability, and some may not even realize they’re vulnerable. It’s ultimately the responsibility of the financial services organization to identify any vulnerability. Doing this quickly and efficiently is crucial if customers are to be treated appropriately, responding to their specific needs and requirements. Using a combination of people and technology is the only way to do this.

Empowering frontline staff to pick up on signs of vulnerability is vitally important. This might be patterns in behavior or specific verbal clues. It’s also imperative that such information is recorded correctly too. Information should be held in a central location, able to be shared with other colleagues who may have a role to play in a particular individual’s customer journey, equipping the whole team with the information needed to ensure businesses can respond appropriately, every time.

Leverage technology

But even the most highly trained and empowered customer service teams will see some vulnerable customers slip through the net. This is where technology can help. Vulnerability detection technology, embedded within complaint management systems, helps to identify customer vulnerability with the right platforms, then making full use of intelligent workflows to ensure frontline staff follow the correct course of action in line with the specific vulnerabilities of a particular customer. Not only does this facilitate the correct identification of the customer vulnerability, but it helps to ensure the vulnerable customer is treated fairly too.

Best Practice as Standard

Ultimately, ensuring vulnerable customers are treated fairly goes hand-in-hand with a customer-focused approach to all interactions. Individual circumstances should always inform a business’s response, and customer vulnerability is no different. By putting in place the right combination of people, tools and technology, financial services organizations can ensure they capture all customer needs and respond accordingly, providing personalized, tailored services and products, underpinned by a duty of care to ensure the well-being of the most vulnerable. It’s only by doing this that businesses will fulfill their obligations while developing those valuable, long-term customer relationships that are crucial to continued business growth.  

Aptean Respond complaints management system can underpin the fair treatment of vulnerable customers. If you’re an Australian organization looking for support in identifying and supporting your vulnerable customers, please get in touch with our complaints management software experts today.