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The pandemic has resulted in a growth in the number of customers categorised as vulnerable (eg elderly members of society who are cocooning) and exacerbated the impact on those already considered vulnerable.

Vulnerable customer categories include those suffering from physical disability, physical or mental health difficulties, cognitive disorders, lower financial capabilities, and those at risk of financial abuse or as a result of a life event such as bereavement.

Online shopping rose sharply in 2020, with many customers buying online for the first time. This has brought to light the issues facing the digitally disadvantaged. There has also been a significant rise in the number of online scams throughout the pandemic, which tend to target those less digitally experienced, typically the elderly.

Another question facing companies is how they can identify vulnerability in customers who conduct their journey end-to-end through digital channels. Companies must consider the appropriateness of online sales channels for vulnerable customers in light of the complexity of the financial product on offer.

Processes in place

Financial services companies should have a good understanding of their customer population and be able to identify actual or potential vulnerability characteristics. Establishing a vulnerable customer framework will enable them to do this and consider the treatment of these customers across their business.

Those companies that do not focus on good customer outcomes may face additional regulatory focus. That has been the case in the UK, where the Financial Conduct Authority has imposed fines for poor handling of arrears and complaints, as well as unfair treatment of customers.

The Central Bank of Ireland has stated that insurance companies must have processes in place to engage with customers experiencing financial difficulties in the payment of premiums as a result of the pandemic. Proactive customer communication about levels of cover is required, and key information related to Covid-19 must be prominently displayed. Businesses must be sensitive to any change in circumstances that may have left customers financially vulnerable and ensure that customer-facing functions are adequately resourced to respond to queries in a timely manner.

The Banking and Payments Federation Ireland has established a vulnerable customer forum to enable members to adopt a best practice approach for customers finding themselves in vulnerable circumstances. The importance of digital technology during the pandemic has been highlighted by the European Commission as part of its new consumer agenda for strengthening consumer resilience as part of a sustainable recovery.


Gillian Kelly is Head of Conduct Risk Services, KPMG Ireland

Those companies that do not focus on good customer outcomes may face additional regulatory focus


Companies should provide staff with the tools to enable them to identify vulnerable customers consistently and effectively. They should be aware of patterns, warning signs and other indicators as a means to identify vulnerable customers. Key considerations include:

  • Do you have a clear definition of actual or potentially vulnerable customers which is communicated to your staff at all levels?
  • Is training provided to staff both at induction and on an ongoing basis?
  • Do you actively monitor customer behaviour and consider potential vulnerability in all customer interactions?

Are you hosting focus groups with operational management to walk through vulnerability journeys and identify learning points for the business?

Awareness of the touchpoints across the customer journey is key in the approach to identifying vulnerable customers. Companies should analyse products, processes and all customer journeys to identify where they may particularly affect vulnerable customers and where the nature of the process may cause customers to become vulnerable:

  • Sales/product suitability. Staff will engage with customers during the sales process and in discussions about product suitability. This gives companies an opportunity to identify, from the outset of customer engagement, any vulnerabilities or potential vulnerabilities impacting the customer (eg cognitive disorders or physical health difficulties).
  • Arrears/pre-arrears. Financial difficulty may be an indicator of a change in personal circumstances (eg a period of unemployment).
  • Complaints. The complaints process may provide insight into the circumstances of the customer and highlight areas where companies must increase their focus on and awareness of potential vulnerabilities.
  • Claims handling. This process requires customer engagement at a time when a financial shock may have been experienced. The nature of the financial shock or life event will determine any actual or potential vulnerability impacting the customer and its timeframe (eg a long vs a short period of unemployment).
  • Bereavement. Due to the nature of financial service products (eg home insurance and loans), customers are likely to engage with businesses where they have suffered a bereavement. Financial services companies must ensure that they have appropriate processes in place in these circumstances.
Vulnerable customer framework

There are three steps in a vulnerable customer framework:

  • Proactive steps. These are actions taken to limit the impact of vulnerability when it does arise (eg consideration as part of the product and process design).
  • Detective steps. These are actions taken to understand the types of vulnerability that may emerge and the triggers which indicate actual or potential vulnerability.
  • Reactive steps. Once vulnerability has been identified, these actions involve the treatment of vulnerable customers (eg monitoring of customer engagement with the business).

To ensure that vulnerable customers are treated appropriately, companies must embed their vulnerable customer framework in their operations, to provide support and fair treatment. Below are the areas companies should consider when developing and enhancing their vulnerable customer framework:

  • Are your board and senior management team engaged with the framework and receiving regular reports and updates?
Strategy and policy
  • Does the business have a detailed and embedded vulnerable customer policy with clear expectations?
  • Do you evaluate your strategy and policy regularly to ensure they remain relevant and up to date?
  • How do you capture vulnerability risk in product design?
  • Do you perform risk and control assessments to identify existing controls for vulnerable customers and any control gaps that exist?
  • Does your record-keeping system allow a sufficient level of detail to be captured about the nature of a customer’s vulnerability?
  • Does your record-keeping allow for periodic vulnerability reviews, taking into consideration the changing nature of certain vulnerabilities?
  • Do you use a risk score for vulnerabilities to support treatment strategies?
Management information
  • Does your data show which products and processes are impacting vulnerable customers?
  • Are your management information metrics aligned to risk and control assessments, and risk scores applied to vulnerabilities?
  • Are you providing a holistic customer view to your senior management team and taking proactive steps to address management information metrics that are outside the accepted tolerance level?
Handling vulnerable customers
  • Is there a clear point of contact for vulnerable customers with a specialised support team and experienced staff providing guidance and advice?
  • Are you tailoring communications to the needs of vulnerable customers?
  • Have you engaged with the Health Service Executive safeguarding and protection team in your treatment of elderly customers who are at risk of financial abuse or who have cognitive challenges?
  • Are all your staff trained in the business’s vulnerable customer policy and approach?
  • Does your training programme encourage decision-making that will lead to good customer outcomes?
  • Does your training programme incorporate on-the-job learnings from experienced staff?
  • Do your staff view vulnerability as ever changing, and do they consistently monitor customer behaviour?
  • How are you supporting customers who are digitally disadvantaged?
  • How do you assist vulnerable customers in gaining remote and digital access to services?
  • Does your presentation of information online allow for sufficient clarity to all customers?
  • Do you make your customers aware of potential and actual fraud, and do you have a treatment strategy where this occurs?