You could be excused from thinking that guidance on vulnerability is a bit like the buses. Nothing comes for a while and then three come together!
February saw the publication of the FCA's Occasional Paper No. 8 (FCA Paper) and the BBA's Guidance on Long-term Conditions developed in partnership with Macmillan Cancer Support, the Royal College of Psychiatrists and The Stroke Association (BBA Briefing). Last but by no means least saw the publication of the third edition of The Good Practice Awareness Guidelines from the Money Advice Liaison Group (MALG Guidance) in March.
You are therefore somewhat spoilt for choice on the newly-published guidance available. The plethora of guidance coming out is, however, indicative of the importance the industry and its regulators are giving this particular subject.
The BBA Briefing on long-term conditions is the shortest of the three and makes an excellent starter before hitting the main course of Occasional Paper No. 8 and finishing off with a dessert of the MALG Guidance.
In the BBA Briefing, the BBA sets out what is a long-term condition (LTC) and seeks to raise the reader's awareness of what living with an LTC can mean. The briefing emphasises that it's not just the significant physical, mental and emotional impact on the person with the LTC, it's the knock-on effect this has on their ability to deal with everyday activities which they previously probably took in their stride. Having an LTC can also severely impact upon a person's ability to earn income whilst at the same time increases their outgoings as they travel for treatment, pay for medication and adaptations to their home, pay more for specialist diets or assistance in the home and countless other incremental costs.
The BBA Briefing goes on to point out that in the UK at least 18 million people are currently living with one or more LTC's with a significant rise in the future expected. Not all these people will need support in respect of their finances, each case should be judged on its own specific circumstances, but the industry does need to make sure it has the capability to deal appropriately with a person who has an LTC where that support is needed.
Guidance is given about what should be considered when developing policies and procedures to support individuals with LTC's, the training to be given to frontline staff, how to deal with disclosures and recording information in line with the Data Protection Act 1998 and making sure that the person with the LTC gets the specialist help and advice and support needed to resolve their financial issues. Providing support for families, carers and third parties is also touched upon and working in partnership with external agencies such as charities to make sure that best practice is consistently attained is also covered by the BBA Briefing.
The basic principles running through the BBA Briefing are also to be found in the FCA Paper and the MALG Guidelines.
The FCA Paper is a much weightier tomb running to 118 pages. The whole paper is genuinely worth a read. The quotes and case studies from real-life situations, however, really stand out. Some of the case studies do prompt the thought, 'surely no firm would really do that?', especially the case study where a cancer sufferer who tried to be proactive and reach a payment agreement before going into arrears contacted their lender only to be told that because the account was not yet in arrears there was nothing the lender could do! There is also a great quote from an elderly customer about his feelings having been told he could be kept on hold for at least 20 minutes, 'and then I just think to myself, 'I am not sure I have that much life left to live' and give up.'
Also of particular note are the comparisons with the work on vulnerability done by the Utilities Industry Regulators and the European and worldwide snapshots showing that it isn't just the Financial Services Industry in the UK that is grappling with these issues.
The FCA Paper gives some thought to what firms can do. This guidance is then helpfully summarised at Appendix IV in the Practitioners Pack. The FCA's Paper is aimed at stimulating interest and debate and raising awareness in this complicated area. The views expressed are stated to be the authors' and are not to be interpreted as reflecting the views of the FCA itself, but it would be a very brave firm indeed not to take on board and give due consideration to the opinions expressed by the authors, not least because the authors themselves in the most part work for the FCA!
The FCA Paper looks at problem areas and identifies what a firm needs to focus on. It is here that we really see the common threads coming through from all three sets of guidance. The problem areas faced by the vulnerable occur across the entire lifespan of products. The main problem areas were identified as:
- No overreaching strategy on vulnerability
- Failure to communicate internally the vulnerable disclosure
- Increased call centres/automation making it difficult to identify vulnerability at an early stage
- Inflexibility in responding to people with vulnerabilities either through poor training, poor knowledge, no autonomy to deviate from the standard process, no process or policy to deal with the situation in place or a policy was in place but not being implemented by the frontline staff
- Lack of appreciation for the customer's time spent in trying to sort out the issues.
The FCA Paper then looked at what firms need to do:
- Make sure that they have a high-level, top-down led policy on vulnerability integral to and considered actively in all areas of the firm
- Do an audit on what they do now, how effective what they do now is, asking the question, 'does what we do produce the right customer outcome?'
- Ongoing evaluation is needed to check that policies and procedures still reflect the best practice
- Training of staff to give them the tools they need, the knowledge to implement solutions and also the confidence to ascertain what is needed. Also need to make sure that frontline staff can recognise triggers or risk areas and refer internally and signpost appropriately
- Flexibility needs to be built in to products, services, policies and procedures
- Clear, simple explanations and information needs to be given in a choice of mediums
Finally, we saw the publication of the MALG Guidance. Although this guidance is aimed at helping consumers with mental health conditions, the general principles apply equally across all vulnerabilities. In fact there are common threads in respect of the good practice guides within the MALG Guidance and the FCA Paper and the BBA's Briefing in respect of what good looks like/what a good outcome is for a customer.
The MALG Guidance offers a general introduction and then sets out the updated guidelines. The appendices then helpfully provide a glossary of terms in respect of mental health conditions and a list of different types of health and social care professionals. The guidelines looked at from a creditor's perspective again reflect the need to train your staff; the need for policies and procedures which will ensure fair treatment for all customers; to work with external agencies in a joined up way; to ensure accurate recording of information and to make sure that the Data Protection Regulations do not become a barrier to dealing appropriately with the customer and making sure that appropriate referrals are made at the earliest opportunity. All of these should by now be familiar to you as they have already been covered in the BBA Briefing and the FCA Paper.
The MALG Guidance goes on and also looks at good practice when debts are outsourced; when and what type of evidence of mental health conditions should be requested and who from and what to do if there is a charge for that evidence; using the common financial tools and how to treat benefits when assessing disposable income. Finally the guidelines look at when to consider writing off debts and looking at only taking court action as a last resort.
Although the MALG Guidance is reviewed last here, it has to be said that it really is the bedrock of good practice in this area, having been first published in 2007. An awful lot of what has been learnt over the years in working with people who have mental health conditions is directly transferable to all other vulnerabilities and you should read this guidance in full and keep in mind what it is recommending, not just for those with mental health conditions but also for all your vulnerable customers.