Read the findings of our review of how retail banks and building societies approach the treatment of customers in vulnerable circumstances that involve bereavement and power of attorney.
1. Introduction
As part of our review[1] of how firms support customers in vulnerable circumstances, we looked at how banks and building societies handled customer bereavement and power of attorney (PoA). We wanted to see what outcomes people received, based on our review of cases, firms’ governance, management information (MI), staff training and outcome testing.
The Consumer Duty[2] requires firms to act to deliver good outcomes for all customers, including those in vulnerable circumstances. Failure to recognise and respond sensitively to a customer’s needs can have a direct impact on the customer’s confidence in engaging with financial services. This work builds on other recent similar reviews, including our review of insurers’ bereavement claim processes.
2. Who this applies to
These findings will be of particular interest to retail banks, building societies, and some payment institutions and electronic money institutions.
We have also recently published a multi-firm review[3] regarding life insurers’ bereavement claim processes. Some of the good practices identified in that review could be applied by banks and building societies, such as use of electronic ‘verification of death’, avoiding the need for claimants to send in Death Certificates. In both that review and this one, we have emphasised the importance of the measurement, monitoring and delivery of good customer outcomes. We encourage firms across the banking, payments and insurance sectors to apply and build on the good practices observed to help consumers navigate their financial lives.
3. Rules and guidance which applies to these examples
We refer to the section of the FCA Handbook on the Consumer Duty (Principle 12 and PRIN 2A, ‘the Duty’), the non-Handbook Guidance for firms on the Consumer Duty (FG22/5[4], the ‘Duty Guidance’), and the Guidance for firms on the fair treatment of vulnerable customers (FG21/1[5], the ‘Vulnerability Guidance’). The Duty builds on the Vulnerability Guidance, requiring firms to consider their customers’ needs at every stage of the customer journey and act to deliver good outcomes for all customers, including those in vulnerable circumstances.
The Vulnerability Guidance remains relevant for firms, however, and firms should continue to refer to it for further information on our expectations for how firms should ensure that customers in vulnerable circumstances experience outcomes as good as those for other consumers.
4. What we found
Overall, the firms we reviewed had taken steps to refine their approach to the treatment of customers in vulnerable circumstances since the introduction of the Duty. We saw evidence of good practice in the support provided to customers, and that the Duty and our Vulnerability Guidance have had a positive impact. However, this was not universally the case. We also found areas in which all firms need to improve. We have set out our findings in more detail below, alongside positive examples identified during our review.
4.1. Finding 1: Policies and Procedures
Paragraph 1.7 of the Vulnerability Guidance sets out that fair treatment of customers in vulnerable circumstances should be embedded in policies and processes throughout the whole customer journey.
Paragraph 9.14 of the Duty Guidance sets out our expectation that firms respond flexibly to the needs of customers with characteristics of vulnerability. Firms will usually need to be able to provide support to their customers through different channels or by adapting their usual approach. But, as stated in paragraph 3.12 of the Vulnerability Guidance, staff should also be able to recognise when it is appropriate to seek additional support, such as by escalating a case.
Paragraph 4.53 of our Vulnerability Guidance states that firms should consider how to meet the needs of consumers who need a third party to access their account or to support them on a short or medium-term basis.
The Duty (within PRIN 2A.6.5R) sets out that, where a person is authorised by a retail customer or by law to help in conducting the retail customer’s affairs (such as a power of attorney (PoA)), the firm must provide the same level of support to that person that they would have provided to the retail customer.
In our review we found:
Good practice
- Firms had clear vulnerable customer policies and procedures, which often set out the expected timeframe for staff to process registration of bereavement and PoA cases. They had also performed gap analyses against both the Vulnerability Guidance and the Duty.
- Policies and procedures were generally accessible to staff through a central repository. The repository held relevant guidance on how to use systems and respond to the support needs of customers in vulnerable circumstances.
- Some firms took steps to help ensure that policies and procedures did not prevent them from delivering good customer outcomes in complex cases. This included holding forums to which complex cases could be escalated, so they could develop individual solutions that may fall outside a strict interpretation of internal policy.
Areas for improvement
- We saw evidence of staff being unclear about what actions they should take and what support to provide in the event of an emergency, such as when the customer’s capacity suddenly changed or when funds were urgently needed. There was clear evidence of this exacerbating the distress for some customers and their representatives when they did not get the support they needed. Firms’ representatives may not individually experience such situations regularly, so it can be difficult for them to have confidence in dealing with the different processes and approaches involved. We therefore encourage firms to help ensure guidance for staff is easily accessible and understandable and that policies are clear that staff should adapt their style to the customer’s needs and recognise when matters should be escalated.
- We recognise and support firms’ efforts to safeguard customers from fraud or financial abuse. However, we look to firms to consider how this is balanced against the customers’ needs to continue undertaking basic banking requirements. In some cases, we observed customers and their representatives experiencing extended periods where they were unable to access funds to pay essential bills.
4.2. Finding 2: Identifying and responding to customer needs
PRIN 2A.7.4G of the Duty explains firms should pay appropriate regard to the needs and characteristics of retail customers (such as those with characteristics of vulnerability), assist frontline staff to understand how to actively identify information that could indicate vulnerability and, where relevant, seek information from retail customers that allows staff to respond to their needs. Firms should set up systems and processes in a way that supports and enables retail customers with characteristics of vulnerability to disclose their needs. In addition, Chapter 3 of the Vulnerability Guidance sets out how firms should help ensure frontline staff have the necessary skills and capability to recognise and respond to a range of characteristics of vulnerability.
In our review we found:
Good practice
- Firms had developed systems that enabled customers to disclose their needs, which staff could then view when accessing that customer’s profile. Some firms had centralised these systems, such that staff from across different business areas and brands could view the customer’s needs, regardless of where they had disclosed them. This capability made it easier for staff to assess how to adapt their support to the customer they were dealing with, improving the customer experience and avoiding the potential distress and inconvenience of having to repeat sensitive information multiple times.
- Some firms sought to proactively identify those potentially at risk of being in vulnerable circumstances, by, for example, using data like transaction patterns, so that they could better respond to their needs.
- The training materials provided broadly made clear how staff should support customers in vulnerable circumstances. It was positive to see a focus on how to adapt to the customer’s needs and communicate empathetically.
- Some firms used artificial intelligence (AI), including speech analytics that – either in real-time or through an automatic review after the customer interaction - highlighted when a customer had said something that could indicate potential characteristics of vulnerability. This helped firms to ensure they provided customers with the right support if their potential vulnerability had been missed in real-time.
Areas for improvement
- In line with PRIN 2A.7.4G, we want firms to actively identify information that could indicate vulnerability and, where relevant, seek information from consumers that will allow them to respond to their needs. We also encourage firms to consider how else they might identify customers who might need more support.
- While systems were in place to record customers’ needs, it was not always clear that staff were consistently using them. We observed some instances of staff failing to check or respond to support needs recorded on a customer’s profile.
- Some assurance reviews noted that issues with training and competency were contributing to staff failing to follow the correct process. These included failing to record a customer’s support needs or firms failing to follow their own processes (such as a requirement that certain types of customer be prioritised), which could make policies and procedures ineffective.
- In some bereavement and PoA cases, staff did not acknowledge that customers were noticeably distressed and upset. Failing to recognise and respond sensitively to a customer’s needs can have a direct impact on the customer’s confidence in engaging with financial services. As well as a general lack of empathy, these instances suggested staff were unable to recognise potential support needs or lacked the training to help them to do so.
- Some firms did not introduce additional training, or competency checks after staff errors had been identified, risking a recurrence of issues. Firms should consider maintaining feedback loops that help their staff and processes to continue to improve based on previous experience.
4.3. Finding 3: Outcomes Testing and Monitoring
Under the Duty, in PRIN 2A.9.8R, firms must regularly monitor the outcomes retail customers receive from products, communications and customer support. In line with PRIN 2A.9.10R, this monitoring must enable the firm to identify, among other things, whether any group of retail customers is experiencing different outcomes compared to another group of retail customers of the same product. We have provided further guidance on how firms might do this in both the Vulnerability Guidance (see Chapter 5) and the Duty Guidance (see Chapter 11). Section 2.4 of our recent publication[6] on good practice and areas for improvement also gave firms prompts they can consider when developing their approaches to outcomes monitoring.
In our review we found:
Good practice
- Firms generally had an outcomes monitoring and testing process in place that included some focus on outcomes for customers in vulnerable circumstances. This included, for example, some analysis of customer behavioural patterns to infer whether they were getting a good outcome.
- Where firms had identified problems through internal/external review, they were making changes to their outcomes testing and monitoring processes.
- We saw firms tracking MI on their bereavement and PoA journeys, including – but not limited to - information on time taken to register PoAs or defund accounts in bereavement cases, complaints volumes and drivers, Net Promoter Score (NPS) surveys, and specific case studies from customers about their experience.
Areas for improvement
- It was encouraging that some firms were trying to make improvements in response to self-identified issues. However, there remains scope for improvement in outcomes testing and monitoring across most of the firms reviewed.
- MI did not consistently give a clear picture of customer outcomes, with firms relying on data that lacked breadth and detail. There was a lack of clarity on what firms consider to be good and poor outcomes.
- We saw instances where MI reports to senior committees lacked detailed commentary or were themselves unclear. We observed a particular focus in some firms on monitoring performance against SLAs. While this is important for monitoring if the firm is responding to what can often be an urgent customer need – to have their case dealt with quickly - it does not necessarily give a full explanation of whether customers’ needs were met.
4.4. Finding 4: Customer Journeys
PRIN 2A.6.2R within the Duty sets out that, a firm must design and deliver support to retail customers (including those with characteristics of vulnerability) such that it meets their needs.
As noted in paragraph 9.11 of the Duty Guidance (in relation to channels used to provide customer support), while we do not prescribe which channels a firm must offer, firms ‘must ensure the channels they do offer meet the needs of their customers, including customers dealing with non-standard issues, and customers with characteristics of vulnerability.’
In our review we found:
Good practice
- Firms generally considered how they might adapt their bereavement/PoA customer journeys to help ensure they are as straightforward and flexible as possible.
- Most firms had dedicated bereavement teams. One firm used video calls for customers to speak to a specialist advisor about their bereavement and another had set up a dedicated phone line for PoA queries.
Areas for improvement
- We encourage firms to continue to design their customer journeys with customers in vulnerable circumstances in mind, particularly for critical services such as bereavement and PoA.
- Most firms had a limited range of channels available for attorneys to access the account of the relevant customer. In particular, app-based banking or online banking were often not available for the attorney to use. This limitation often appeared to be due to the firm’s investment decisions, suggesting access could be expanded if resource was committed to it.
- We saw a common issue where customers (particularly in bereavement and PoA processes) had to repeat information when speaking to different staff members, or having their cases delayed or dropped altogether because they had been ‘lost’ in the firm’s systems, risking further distress and upset.
- Our discussions with several firms highlighted that fragmented customer relationship management (CRM) systems across business lines could make it more difficult to keep track of cases and progress them efficiently. We encourage firms to focus on ensuring customer journeys are fit for purpose across legal entities, to reduce the risk that consumers do not get their needs met or must repeat information unnecessarily.
5. Next steps
While most firms displayed good practices, there were also many areas for improvement. No firm can afford to be complacent in this area. We have written to all firms in our review, highlighting our findings and the expected next steps.
6. Further reading
- Firms’ treatment of customers in vulnerable circumstances - review[1]
- Delivering good outcomes for customers in vulnerable circumstances – good practice and areas for improvement[7]
- Consumer Research: Vulnerability Review – Improving understanding of the outcomes for consumers in vulnerable circumstances when engaging with financial services firms[8] (PDF)