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18 October 2023

Firms using vulnerability assessments for their Consumer Duty compliance are identifying a similar proportion of vulnerable clients as the FCA’s own findings, new data from the MorganAsh Resilience System (MARS) can reveal.

MorganAsh, a support services provider to the financial services sector, has compared data from UK firms using the MARS platform with that of the FCA’s own Financial Lives survey. It found that in three key age brackets (25-34, 35-44 and 45-54), users reported a similar proportion of vulnerable people as the regulator.

In older age brackets (55-64 and over 65), MARS users actually reported a significantly higher proportion of vulnerable people, with 83 percent of over 65s identified as vulnerable – compared to 60 percent by the FCA.

MorganAsh believes the FCA’s use of ‘over 65’ as a category could contribute to the disparity, especially as many high-net-worth firms record wide variations in age brackets older than this.

Nonetheless, the FCA’s Financial Lives survey from 2017 provides an important benchmark for vulnerability by age range and is statistically valid with over 13,000 responses. The same survey found that around 50 percent of consumers in the UK have some sort of vulnerability.

Andrew Gething, managing director of MorganAsh, believes that the significance of benchmarking in managing consumer vulnerability cannot be overstated, as identifying improvements and ironing out efficiencies relies on a benchmarking framework.

Andrew said: “If you don’t benchmark, there’s no way to find out how you compare to others, how you can improve performance, spot inefficiencies or determine the best cause of action when changing or updating processes. The benefits of using benchmarking to manage consumer vulnerability and compare against best practice cannot be emphasised enough.

“Of course, Consumer Duty is new, so there are few battle-tested benchmarks, and most companies won’t have annual or comparable data to compare with their peers. But there is a decent place to start. The FCA’s Financial Lives Survey has provided some good data.

“While the MARS data will depend on response rates and the make up of each firm’s customer base, this analysis does show that the processes put in place by firms to assess and monitor vulnerability are working. Although crude, the proportions of vulnerable customers identified is a very simple measure, and hence easy for firms to report and monitor. Far too many firms are still only reporting proportions of vulnerable consumers in single figures and quite clearly their assessment processes are just not fit for purpose.”

MorganAsh launched its MARS adviser tool in March last year to help firms understand and monitor vulnerable customers and deliver good outcomes – in line with the requirements of Consumer Duty. Through clear and consistent assessments, businesses can identify vulnerable characteristics and generate an objective Resilience Rating – much like a credit score.

The system is in use across financial services and the utilities sector – and has been shortlisted for a number of high-profile awards.

To find out more or access a free trial, visit: morganash.com/mars or phone: 0330 159 8162.