Glenn Matthews, Head of Operations at Close Brothers Motor Finance
The last few years have brought about seismic changes in the motor industry. Dealers have navigated the shift to online retail, demand for AFVs has accelerated, and the semi-conductor shortage has played havoc with manufacturers. But one of the biggest changes goes all too often ignored; the changing landscape for vulnerable customers.
There are more than 24 million people in the UK with ‘characteristics of vulnerability’, and 10.7m whose vulnerability specifically impacts their financial resilience . ‘Vulnerability’ covers a wide spectrum of risk; all customers are at risk of becoming vulnerable, but this risk is increased by things like poor health such as cognitive impairment, life events such as new caring responsibilities, low resilience to cope with financial or emotional shocks and low capability, such as poor literacy or numeracy skills .
Because of the rising number of vulnerable customers, how firms treat them has shot to the top of the FCA’s agenda. The regulator released several rounds of guidance to financial services firms over the course of the pandemic, and that focus shows no sign of waning.
The regulator requires businesses to:
- understand the needs of their target market/customer base
- make sure staff have the right skills and capability to recognise and respond to the needs of vulnerable customers
- respond to customer needs throughout product design, flexible customer service provision and communications
- monitor and assess whether they are meeting and responding to the needs of customers with characteristics of vulnerability, and make improvements where this is not happening
And now, with the cost of living crisis heating up and inflation set to hit 13% later this year, we are preparing for a surge in the number of people needing help with their finance agreements, and within that a disproportionately high increase in vulnerable customers.
Covid & the customer journey
At Close Brothers Motor Finance, we have undergone a dramatic operational transformation project in terms of the customer journey over the last couple of years.
The pandemic was enlightening. We were certainly not the only financial services company to realise that our forbearance policy could be updated. We wanted to ensure that we could be more adaptable to customer needs, with the ability to offer breathing space, alternative payment methods, and extended periods of support. We created an enhanced forbearance offering which applied to all finance products and agreements.
We expanded and retrained our customer handling team, and brought in customer-centric KPIs. This meant a transition from commercial KPIs (like collections figures and time on calls) to outcomes which prioritised the customer; finding the right solution for all parties, a first-time resolution, and honest & open conversations.
Vulnerable customers: reaching best practice
All customers deserve the best service from their finance provider, and a one-size-fits-all approach means some customers would fall through the net. That’s why we designed a bespoke vulnerable customer policy. We ran a survey of our customer base, and ran focus groups and 1-1 interviews with our vulnerable customers to shape the programme moving forwards.
Within the policy, we differentiate between customers who are somewhat vulnerable and require some flexibility/enhanced forbearance, and those who are particularly vulnerable and in need of enhanced levels of support. For this latter group, we trained up a specialist customer handling team to manage such cases. Enhanced training on empathy, resilience, and decision making was crucial; our team needed to be able to handle the cases emotionally, and feel empowered to make the right call for the customer. This is never commercially-led; if the right decision for a particular case is for a customer to have the car and walk away, that’s the decision we make.
We also ensure that there are multiple touch points throughout the finance process, both when everything is smooth-sailing and if things go wrong. At any and every missed payment, the customer team will be in touch to try to arrange a solution. During the default process there are multiple layers of communication. In the most extreme cases, our collections suppliers are thoroughly trained in dealing with vulnerable customers, and will walk away if they discover a previously-unknown vulnerability.
Hurdles in the road
The biggest issue we’ve had to tackle in our journey is the stigma attached to vulnerability. Many customers worry they’ll be treated poorly or turned away from finance if they disclose their vulnerability, either to their dealer or their finance provider. This pushes providers into a reactive stance, dealing with vulnerabilities once they’ve already happened, rather than being able to provide the right support in the first place.
The industry needs to join forces to solve this, with finance providers, dealers, and even manufacturers playing a role. There is a communications campaign required, to explain to customers the regulatory protection in place and the power their disclosure holds. Whether it’s on the forecourt at early meetings, at point of sale, or in the welcome call to the finance arrangements, the message must be clear and consistent; vulnerability results in protection, not persecution.
