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In our latest episode, David Morrey and Ben Farmer, discuss the latest updates on motor finance saga where the Supreme Court has expedited an appeal involving Close Brothers, and the FCA's involvement in urging a swift resolution. The FCA's consumer duty feedback, covering various updates and analyses, including the FCA's priorities for 2025, the review of consumer duty annual reports, and insights into complaints and root cause analysis.
The term vulnerable customers have fallen into common usage, largely because that's what the Regulator calls them but for me it's a bit more nuanced than that. I think when you think about this it's how we think there's a person first so I'm a customer first, before I have either temporarily or on a longer term, a vulnerable characteristic. Most people don't want to be defined by a vulnerability they may have so we should think about them as customers first and then cater for their needs.
From our own data, actually we have 47% of our customers showing at least one characteristic of vulnerability. We're not talking about one small team of people that manage and look after vulnerability you’re talking about ingraining the culture and the concepts and the processes into absolutely everything that we do, everywhere there is a customer then we should be talking about vulnerability as well.
Irina
Hello and welcome to our new episode of Risk and Regulation Unravelled our Grant Thornton's financial services podcast. I'm Irina Velkova, your regular host and I bring to your conversations about the dynamic world of risk and regulation. We help our financial services clients understand new regulatory developments, upcoming changes and how to stay ahead of the regulatory curve by inviting renowned experts to share their insights. Before we begin, I have some exciting news. Our podcast is now available on all major platforms including Apple podcasts, Spotify, Google podcasts, and Amazon music and if you don't want to miss an episode, no matter where you are, please go and subscribe. I'm rushing to dive into the subject of today's conversation as it is one that is close to my heart, and I think we have plenty to discuss with my exceptional guests so let's get into it. It is my absolute pleasure to welcome Maxine Pritchard, who is the Head of Financial Inclusion and Vulnerability at HSBC UK. With 16 years’ experience in the financial industry Maxine has found her passion within customer experience and has been leading on HSBC UK's financial inclusion and vulnerability strategy for the last five years. Her drive is to ensure that no one is left behind irrespective of their circumstances and that everyone has fair access to banking. When life brings difficult times, she wants to ensure the bank is able to provide the right support when it's most needed. Absolute pleasure Maxine, you are an inspiration and welcome to the podcast.
Maxine
Thank you very much for having me.
Irina
We are also joined by Peter Lovegrove. Peter is a Director of Grant Thornton’s Regulatory Practice and has been with the firm for nearly six years. He is a qualified Financial Advisor and Senior Compliance professional with over 20 years’ experience in the financial services industry including six years as an FCA Supervisor. Peter specialises in understanding and applying the FCA's approach to conduct regulation. The subject of today's topic too, great to have you Peter, welcome to the podcast.
Peter
Thanks Irina, hi Maxine.
Maxine
Hi Peter.
Getting to know Maxine Pritchard and Peter Lovegrove
Irina
As I am sure you grasped from the intros my guests come with a plethora of experience and incredible insights to share but today, we are going to talk about a subject that has been on the regulatory agenda for a long time and has reached an even higher level of prominence in recent months and that is the subject of vulnerable customers. COVID-19 has put vulnerabilities even more in the spotlight and earlier this year the FCA issued its updated guidance as to what firms should change. The main purpose of the guidance is to drive improvements in the way of vulnerable consumers and bring about the practical shift in firms’ actions and behaviours. The underlining premise is that FCA wants vulnerable customers to experience outcomes as good as any other customer and to get consistently fair treatment.
The FCA has already sent strong signals that vulnerable customers are really high on its agenda and falling short of regulators expectations will not be tolerated, so to shed more light on how the FCA defines vulnerable customers and how a firm is expected to implement this guidance, or in some instances what they are already doing. I have invited Maxine and Peter to chat about it as I know they are real experts on the subject and I'm sure it will be a fascinating discussion.
Before we get into the nitty gritty of the topic though I would like to understand a little bit more about our guests. I know for example that Maxine tends to go to the wrong places when it's really important to be at the right place and I know that away from work Peter enjoys singing and he has numerous recordings and the soundtracks to several Hollywood films, including Titanic. This all sounds absolutely incredible and I'm looking forward to exploring all these stories throughout the podcast today but perhaps let's start with something more light-hearted, so we'd like to know from Maxine, starting with why did you take up on this role at HSBC? Isn't that one that comes with a bit more emotional charge than a typical corporate job? How do you think about it? How do you deal with it on a daily basis?
Maxine
Yeah, absolutely. So, I've always had a real passion for people and more specifically wanting to make sure that people have a fair shot at whatever it is that they are doing and that they don't face unnecessary barriers. Having a background in in projects I've always loved being able to make a difference and be able to see what that difference is that I've made almost immediately. So, tying the two things that I love doing together has given me the perfect role. Personally, experiencing some rather difficult personal situations through family illness, family bereavement and really seeing how finances can impact what goes on in the family home at the most difficult of times when to be truthful finance is the last thing you want to be thinking of. So really, it's given me a good understanding of how we can help prevent make things harder for people at an already a very difficult time.
Irina
So, you found your calling?
Maxine
I think so. Yeah. I think so.
Irina
That sounds great, thank you Maxine. And Peter, I guess just turning into where does your interest into the subject stem from?
Peter
Yeah, I think a lot of what Maxine said sort of resonates with me, this is a human thing isn't it? I think my interest in customers with vulnerabilities has sort of always been there and that FCA activity in this area sort of largely codifies what I felt all the way along the firm should be doing. I think because we work in financial services and we first tend to forget the enormous capacity that the industry has to affect the quality of people's actual lives on a day to day basis, you know, whether for good or indeed for ill, I think that you know, firms want to make money, which is fine but we also want the industry to be trusted and valued and for all sorts of reasons going back quite a long way that trust isn't always there and that's a shame. I think because so many firms do so many great things for customers right the way across our industry and that's not always visible. I think that being good at identifying and catering for customers who are in a tight spot is both desirable in and of itself but it's also a really great opportunity for the industry to present the best of itself. I think that's why I’m passionate about it and one other thing I'd say as well, Irina, the term vulnerable customers have sort of fallen into common usage largely because that's what the regulator calls them but for me It's a bit more nuanced than that. I think when you think about this, it's helpful to think there's a person first so I'm a customer first before I have either temporarily or a longer term a vulnerable characteristic. Most people don't want to be defined by vulnerabilities they may have so we should think about them as customers first and then cater for their needs.
Irina
Indeed, and most importantly as I said earlier, we all work in the financial services industry and we sometimes tend to forget that we are all humans, this is where it all starts, and the industry is not going to be there if it wasn't for the humans. I guess let's just try and get into more detail, if you like elements of this fascinating subject and the regulatory angle and Peter perhaps just to set the scene, maybe one for you. The FCA published a few months back an updated guidance as to what they would like obviously firms to change. What do you think are the big-ticket things that firms really need to take into consideration when actually thinking of implementing this guidance?
Peter
Okay, so I get the dry one first? That's fine. Yeah.
Irina
Sorry about that.
Maxine
Get to the risk first.
Peter
Yeah, as you say the FCA published its final guidance for firms on the fair treatment of vulnerable customers in February 2021 then a follow up consultation. To quote from FCA's own website "we wanted to drive improvements in the way firms treat vulnerable customers and bring about a tactical shift in firms’ actions and behaviour" you know, we get asked "firstly translate that for us" and "what does that really mean"?
Irina
You just read my intro because I started the podcast with that same quote from the website as well and you just reviewed what I've copied and pasted from there.
What the FCA’s final guidance for firms on the fair treatment of vulnerable customers means?
Peter
No secrets for me Irina. Yeah. What does it really mean?
I think this goes without saying that addressing the needs of customers with some vulnerable characteristics goes to the very heart of what it means to be an FCA regulated firm. I think it's one manifestation of some fundamental expectations that go right back to how firms seek to make their money in a sustainable way, you know, from a customer outcomes perspective.
I think what the FCA is asking firms to do is to continuously challenge themselves, what is it about our products, not anybody else's? What is it about our products and how they are distributed and serviced that could lead to poor outcomes for customers whether they are vulnerable or not?
Firms need to think about their business model, their target market, their products their customer’s needs and to have identified what is more likely to constitute a vulnerable customer for them. I think the FCA is getting frustrated with firms treating the issue of vulnerability as something that's sort of separate or bespoke that sort of needs to be dealt with as a specific problem or bolted on to its other activities. Yes, you need policies and procedures and all those good things but that's not nearly enough on its own anymore.
I think what the FCA is asking firms is to build tailored supportive interactions for customers appropriate for their products and services rather than treating vulnerability as a compromise or distraction from their main sort of, you know, commercial activities and whilst vulnerability is often difficult to predict or identify it's vital that a firm goes as far as it can in understanding what vulnerability looks like for its customers so they can handle interactions with customers better and in a more supportive way.
We think that ultimately the best way to approach this is to try and avoid a transactional approach and strive to treat every customer in a way that meets their needs whether they are vulnerable or not, and in that way good customer outcomes can ensue and a sort of a distinction, if you like, between more and less vulnerable customers begins to fall away. Also, I think the FCA is trying to engineer a significant industry wide cultural shift here and it's not messing around, I mean you said earlier that failure will not be tolerated or words to that effect. You know, the guidance does suggest that the FCA is going to monitor firms’ activity over the next couple of years and they look to act with firms that are continuing to fall short and that's the sort of signal that the FCA is, you know, willing to wheel out its heavier weaponry in this area which it hasn't necessarily done up to this point, I think.
What does the FCA consider characteristics of vulnerability?
Irina
Yeah, absolutely and that's how I feel as well and that's how I understand what they are trying to get to with that guidance and I guess what you just said probably leads well into the next question around, what does the FCA consider to actually be definable characteristics? Customers?
Peter
Okay, yeah. So, let's try and take each of these so-called drivers of vulnerability identified by the FCA and a few characteristics that firms need to consider.
The first driver of vulnerability is health, you know conditions or illnesses that affect someone's ability to carry out day to day tasks. So, is that permanent or temporary? Is that health condition, physical or mental or both? Is it a one off? Is it periodic? Is it recurring? And we know of course that sadly the pandemic has exacerbated an already significant problem with the nation's mental health. So, the first thing is health. Second driver is what the FCA calls life events, so major events that we're all going to experience in our lives, bereavement, loss of employment, relationship breakdown and again, you know research before the pandemic suggests that that can affect up to 20% or so of the UK population at any one particular time. Arguably, that's likely to be higher just at the moment. So, firms if you're thinking about, you know someone's personal circumstances changed, their address their marital status, their employment status, do they have unusual debt patterns, have they recently made any insurance or protection claims for example. Are they caring for someone else, are they a career, do they have dependents? The third one is about people's resilience. So, this is basically people's, you know, relatively low ability to withstand shocks be they financial, emotional or something else or a combination of things that might affect up to a third of UK adults at any particular time. So as a firm are your customers in principle in an inherently more vulnerable position by virtue of their health, their age, their employment, their income or other personal circumstances, again, including whether people are dependent upon them. Are your customers having to live in the now, paycheck to pay check. We think that over a third of the UK population has less than five hundred pounds in readily accessible savings and for some people debt might be becoming unmanageable. It's not easy to have a clear sight of how many customers that affects insignificant debt difficulty but it's very likely to be in the millions, possibly higher than 5 million people. And then the fourth area which the FCA identifies as the driver of vulnerability is capability, so people with relatively low knowledge of financial matters, a lack of confidence in managing their own money, maybe low literacy or digital skills, possibly people who are at risk of financial abuse in some way, possibly the customer doesn't make their own decisions when it comes to their finances and this kind of lack of capability may affect up to around a fifth of UK adults. So, banks have got to consider that, how can we approach people respectfully? How can we provide support and services which caters for the needs of those people? So, there's the four drivers.
How does HSBC UK look into ‘vulnerable’ characteristics?
Irina
Yeah, thank you Peter. And I think whilst the first couple are probably a little bit more objective, I think the third and fourth, but you mentioned could be quite subjective and perhaps quite a challenge for firms to actually implement and think about it. And then I would like to ask Maxine, how does HSBC look into those drivers? What do you have in place? The HSBC, for example, are policies aligned to these four drivers? So, you have some broader criteria?
Maxine
Yeah, I think it's really helpful if as an industry we are all talking the same language that we all have that same understanding, so absolutely at HSBC UK we do have those same drivers and we do work to the same definitions, if you wanted to use that word, the same drivers and the same understanding around people moving into vulnerable circumstances or they might be permanently in a vulnerable circumstance and that is sort of ever changing. We know that from our own data actually 47% of our customers are showing at least one characteristic of vulnerability and of course, I think, you know, Peter has just described the different boxes, but most people don't fit squarely into one box, there's often multiple things going on for all of us at any one time and for some the impact will just be greater than for others. So really recognising that it's not about putting somebody in a box, recognising as the word you used Irina, humanity, recognising that we're just talking about people's lives, we're just talking about everyday situations and then sadly very real situations for lots of people. It helps that we all talk the same language, that as an industry we share that sort of best practice, and we work together to make improvements to our industry.
HSBC UK’s approach to the vulnerable customer guidance
Irina
Yeah, absolutely makes sense. I absolutely agree with that. Did you have to as a bank, as an organisation, did you have to make lots of changes following on from the FCA's latest guide or final guidance? As Peter correctly described it, in terms of what kind of policies and procedures HSBC, UK already has in place, or it was just like build up on what you were doing before?
Maxine
Yeah, so we've been on a journey, love that, love that phrase, for a few years now and we’ve sort of been working alongside the FCA and making sure that we're understanding the challenges that they're calling out and their expectations and so we have had a framework in place for some years now and actually when the final guidance came through it was really a ratification of what we're working on, we do have that same sort of philosophy that we're not talking about one small team of people that manage and look after vulnerability, actually, you're talking about ingraining the culture and the concepts and the processes into absolutely everything that we do, everywhere that there is a customer then we should be talking about vulnerability as well. So, we have some very similar pillars to how the FCA describes so we created a huge training programme for our colleagues and very importantly that didn't just focus or hasn't just focused on our frontline colleagues who are supporting customers on a daily basis, they can only offer what they're given to offer by the people that designed the products and the people that manage those processes. So, it's really important for us that everybody in the organisation have that same understanding of vulnerability so that actually we can present good products to our frontline to then support the customer most effectively. We went through a process of creating a specialist support team so where people perhaps needed a little bit more support or slightly tailored support there is specialist support available to them depending on what their needs are. And sometimes it's a case of actually helping someone to understand what their needs might be and how we can help as a bank.
Irina
Is that a frontline support team Maxine? They actually communicate with customers.
Maxine
Yeah, directly with the customer. So, they provide daily support to customers, for some that might be ongoing support and we have reasonably regular contact with those people. For others it might just be a one off with that where they need some support at a particular point in time.
Irina
Do your customers tend to know about the special support as well? I mean, do they tend to call a lot or has this been a journey as well, in a way in terms of communicating it out there?
Designing for vulnerability
Maxine
Yeah, we make that assessment when they contact us and we take the decision as to which route, we will take them through but actually interestingly that leads me on to the next sort of area is being able to record that need and I very specifically use need there rather than the vulnerability, we don't feel that it's as helpful as we need it to be for a customer. If we focus on what their vulnerability is, you know, we don't know what the challenge might be for that particular person in their particular circumstances so what we focus on is what can we do to help, so we record what their need is, how we might adapt our service to help that individual, the idea is that they only have to tell us about that circumstance once and that information is shared accordingly across systems in mind.
Then the next area is all around product design and I think Peter already touched on it, what I like to think about is if you design for vulnerability then you get it right for everyone, you don't have to have special bolt on processes. This is really kind of looking quite deeply into the products that we already have available, any new services, any change in product that might happen, really kind of making people question at every point, how would this work? How would this work and just constantly challenging yourself to make sure that your service can work for everyone all of the time and then wrapping around all of that, Peter will be very pleased to hear that there is governance and oversight to make sure that really again, building that into the rhythm and routine of our governance and making sure that through every governance layer in every part of the bank that we do have good checks and balances in place to make sure that the vulnerable customers are getting good outcomes.
Practical steps to meet vulnerable customers needs
Irina
Yeah, that's great Maxine and I guess obviously, HSBC UK is certainly an industry leader in many aspects and I know certainly from the work you're doing on vulnerability on vulnerable customers as well, I think could be really helpful for our listeners, for example, if you just share some of the practical steps you took actually to try and make sure that vulnerable customers’ needs are met and you just set that up, how do you identify them and I know the processes you have in place to do so together with the product design, but other than that did the guidance result, if you like, in anything more specific in terms of practical steps?
Maxine
Yeah, I think here when you're looking at products there's sort of two angles to take that from, as I say, kind of making sure that our products can work for everyone all of the time and a brilliant example, I'm so proud of what we've done as a bank is launching our new debit and credit cards and they not only look brilliant but they also now have accessibility features built in as standard, you do not have to phone up and tell us or message us or contact us through the branch and tell us that you need something different, that card will just work for more people and their changing circumstances. So, things like having a notch that that will help identify which way to put the card and arrow also helps identify which way to put the card, some tactile features that help you to know whether you're holding your debit card or your credit card, all the features and the information is flat printed so there's none of that embossing that rubs away after a period of time. It's all flat printed in larger font on the back of the card, so it's not busying up the front of the card, it's all on the back of the card in much larger font. Some very, very simple changes but the impact of that as someone might gradually lose their sight, particularly in older age. There doesn't need to be a special process. So that's a good example of standardising accessibility, standardising how things can work for more people all of the time versus where you might need to think about where you've got gaps in your processes or gaps in your services.
So, an example here I would use is recognising that we have a basic bank account that is available for people to access, and it's not always been easy for people without the right documentation to open an account, so we partnered up with initially through to the Salvation Army as part of what we call the Survivor Bank Programme and that made us able to offer accounts to survivors of modern slavery and human trafficking. Then we expanded that service working with Shelter to then look at other excluded groups, such as those without a fixed address and the multitude of reasons why you might not have a fixed address or have that documentation and make sure that people can access financial services because fundamentally you need a bank account for today's society and the more we can get people with access somewhere safe to keep their money it takes away the other risks that they're exposed to in life.
Irina
Yeah, that sounds like as I said, some very simple steps being taken but actually making such a huge difference and always going back to the drawing board and as you said, just asking some really fundamental questions as to how we can actually make sure that our products and our services can serve all of our customers. I think that's pretty much aligned to what you said earlier, Peter, in terms of this more holistic approach, do you think that's what the FCA’s intention is behind all of that thinking as well, in terms of we just want to make sure that you ask these questions upfront, US firms? I mean.
Peter
Yeah, that's right. I mean, Maxine, used the word “ingrained”, I think earlier, you know HSBC is working to make sure that these ideas are ingrained in every layer of the business whether your customer facing or not and I think that is what the FCA is looking for, firms to strip their business model right back. And as you say we know ask those fundamental questions, well, you know, what are these products for? I also really liked the way Maxine articulated this idea that if we designed for vulnerability, chances are we'll design a great product for everybody. Yeah, I think that's an idea that can really resonate and I think firms should adopt that.
Irina
Absolutely brilliant. Okay, we're getting too much into the deep kind of foundations of this topic so I'll use the moment for more light hearted questions and it may be a good time to ask you Maxine, what kind of steps did you take from a practical perspective to ensure that you don't end up in the wrong places anymore, and I must admit, I tend to get lost constantly and particularly in this country, I for one always get on the wrong train, for example, or there is something wrong with the train so end up in the wrong direction so I tend not to use trains in this country which is quite difficult because you told me something about planes which sounds even more serious, so what's this?
Maxine
Yeah, and I do get the mickey taken out of me from my friends on a regular basis and it's not uncommon that I end up in the wrong place. So we had a holiday and in my defence we had gone on to Croatia first and then flew into Italy and then we're flying back to the UK and I took us to the wrong airport to fly home, actually we had quite a nice amount of time, it wasn't the usual panic of arriving at the airport and sort of rushing through security, we had plenty of time, wasting time getting drinks and then I was sort of looking at the board, where's our flight and then I had this realisation of what I had done and the other airport was a good 45 minutes away, although our taxi driver did do it in about 30 minutes just put your foot down. We did make it in time. Yeah, so that was a good stressful moment and then the ending story was back in the days where you still would print an AA route finder and I proudly turned with, nobody else had bothered thinking about how we were going to get there and I was like, it's okay, I have all the instructions I’m the fun one at the Hen do, obviously but I reversed the numbers on the postcode so we ended up where we were supposed to be in this idyllic cottage just outside of out of Bristol countryside. We were right in the middle of a housing estate with a fire station next to us, another good one.
What measures have I put in place, though? I mean, that's a good prompt that I probably should put some measures in places. Maybe I'll have a think about what I should do.
Factors firms should think about when considering vulnerable customers
Irina
In all fairness I'm not sure why I've put any measures in place to make sure I don't end up on the wrong train, as well but I should work on that. And let's go back to the discussion today in more detail.
I'm sure Peter you share that the view from what we can see a lot of in this guidance, particularly there is lots of reference to culture and behaviours and both you and Maxine reference that as well, particularly about the culture point but think what other elements that firms should really think about when considering vulnerable customers beyond the pure design of products and services and policies in places that the more administrative parts if you like, what beyond them is in there?
Peter
Okay, yeah, you're coming back to me for the dry stuff again, after the fun stuff.
Irina
Start with a message.
Peter
Well, I mean, it again builds on what Maxine was describing about what she and her team have been doing because she gave some really great examples of applying these kinds of ideas in practice, which isn't actually particularly easy. Again, I think, you know, this goes back to the heart of what being an FCA regulated firm is all about, as you mentioned earlier, the guidance the FCA published in February asks firms to consider vulnerable customers through four lenses, customer base, products and communications, staff capability and monitoring all of which Maxine sort of touched on when describing some HSBC examples but if we, let's briefly explore each of those in turn, so customer base products, we think that firms should consider every stage of a customer journey throughout whole product lifecycle to pre-empt or predict if possible, instances of vulnerability, even if, of course firms can't stop customers being or becoming vulnerable. So yeah, firms should ask themselves stripping it right back again, this idea, who is this product for, whom is it more or less likely to be appropriate and again Maxine's idea if we design for vulnerability, we should get it right for everyone. At each stage of the customer lifecycle how are we going to identify someone who could be vulnerable, how are we going to empower customers to make it easier for them to interact with us on their terms, what could we do to cater for or even alleviate a customer's vulnerability at that point in a product lifecycle. Can we stress test products or services? Can we subject to certain conditions? Or to see how they might perform and arrange different market environments and how vulnerable customers might be affected? Can we test on a range of life experiences for customer through mystery shopping or other techniques?
So, I think the FCA wants firms to build up a good idea of what a vulnerable customer might look like for them and their products and the ways they can then identify and cater for it. Communications, I mean these are not new ideas, more sort of other parts of regulation but firms should always design communications from the customer's point of view. So probably explain what it's trying to achieve, personalise as much as possible, ensure your customers understanding is crystal clear to them, what you're asking them to do and what the consequences of any action you're asking them to take will be. I think also it's really helpful for firms to try to match communication channels, particularly productive communication with the channel through which customers have been interacting with the firm because in that way the customer is probably giving you a good idea of how they would like to interact with you. So, make it easy for them if you can, also tools or other flags that make available support available from human beings, if you're interacting with the firm digitally in some way, you know, make available human support for customers that might need that. I think Maxime mentioned earlier, you know firms should try to minimise, if at all possible, the number of times a customer has to inform them about their vulnerabilities or about their needs is something people might not enjoy. Staff capability.
Third area. I think it's interesting. I mean, we see in our work, don't we Irina that a firm's staff reflect its core values, by which I mean they reflect its actual core values which aren't necessarily the same as the core values the firm would like you to think that it has its staff behave in accordance with how they're incentivized, whether that's explicitly by how they're assessed over how they're paid, or implicitly by the firm's culture and its leadership. We think firms should embed a good core knowledge in everybody, particularly perhaps customer facing teams but everybody to understand, you know, for us who might a vulnerable customer be, recruitment is critical, you know, recruit staff who share your values, the values you understand that believe in what you're trying to do, educate staff as to what vulnerability is and how it is likely to manifest itself for your customers and your services.
Also, again, Maxine's touched on this, ensure staff are trained to identify and support the needs of the customer, they recognise it, they know what to do and empower and equip staff to exercise their own judgement in customer specific situations, perhaps within some parameters, that's because its staff understand so they know what they're supposed to do, and they feel empowered to help people. And finally, monitoring. So, you know, identifying how well customers vulnerability is identified is likely to be part of first, second, and even third line monitoring for any firms large enough for that to be proportionate. We think firms can and should have robust detailed product review infrastructure and metrics which measure the extent to which vulnerable customers have been identified and received a good outcome, which of course involves articulating what a good outcome is. That's really the heart of it.
Irina
Yeah, no, that's very helpful, actually sets out some really clear expectations as per the guidance, as you say and puts a lot of onuses on the firms, and I think you've been crystal clear in that on relaying the FCA’s expectations in that. So, I guess, turning to Maxine, what do you think your biggest challenges have been in practical terms and implementing all of this for these four lenses that Peter just talked about?
Challenges implementing the vulnerable customer guidance
Maxine
I think probably the scale and size of an organisation that has been well established for over many, many years, lots of different systems, legacy systems that are used by employees all over all the globe that are supporting customers in the UK and so I think you know, that the complexities of a huge structure, so when we're talking about needing to embed into absolutely everything that we do, that's quite a lot, you know that but when you want to get to the point where every single customer touchpoint in every single channel works well for all customers, that's quite a feat to achieve. So yeah, just in the UK alone, across our UK network we have 14 million customer's using multiple different channels and using those channels at different points according to either what works for them or what, you know that how well we've implemented a particular process into a channel. So definitely the scale and probably, you know, fitting into a global structure as well, when you've got very specific regulation from the UK or very specific expectations from the UK is marrying that up with our global policies and I think we've been extremely fortunate and I hope that other firms start to see this as well but culture is absolutely key, it really is without having support from the top and right from the top none of this is possible, none of it, none of it can really be achieved and I think Peter, you've talked about how there's a difference between what culture you think you've got versus what culture you actually have, you know, as a great example of when we've launched the survivor bank and no fixed address services the amount of our colleagues that have reached out and used the word pride and said how pleased and honoured they are to work for an organisation that that prioritises this kind of activity, which you know that's really important to make sure that everybody's pulling in the in the right direction. So, I suppose challenges always become opportunities, don't they? Yes, it's difficult but I think you know the fact that it makes sense, I don't think anyone would read the guidance and think don't understand what the FCA is getting at, I don't understand why we need to support people, perhaps some of the practicalities of how we do that could be more of a challenge, but you know, everybody wants to be a good fellow human being and make sure that we're making a good system for everyone.
Irina
I think you're absolutely spot on saying the practicalities because I think what could be really useful again, for people who are listening to that, perhaps is exploring just a little bit more about how do you ingrain that in behaviours? How do you make sure that these actually work in practice across the firm? And you said, obviously, lots of employees and I just perceived being really proud of that and that you're doing things in that regard but how did you go about making sure that it is indeed ingrained in people's minds and your staff’s minds?
Maxine
You know, I think, actually, a lot of it comes from making sure that you're doing the right thing for the right outcome for the right people. So, you know, accepting that we probably don't know the answers in the bank, you know, we don't necessarily have the experience, we might have the will and then the desire to make changes but we don't necessarily know what those changes need to look like and how they need to happen, so really calling on friends in the third sector and three charity partnerships to get a really good understanding of what it is people need and what gaps and barriers are we providing to then make sure that what we're building is the right answer. When you do that then the customers kind of start talking for you in a way, you know, say the people that have reached out and said how proud they are, there might be somebody that sat with a customer and opened an account for them and you know, they can see the real-life difference that's making for an individual. I think, you know, really making sure that you get a good understanding of what it is you're trying to do and then people come on board with you because they understand from a real-life situation as to what needs to happen and how we need to change.
Irina
Yeah, sounds good that again we're going back to indeed asking the right questions and making sure that you explore all options to get the right answers and you just do the best you can, isn't it? Yeah. I'll go back to Peter with a fun question this time and I must admit, Peter, I still remember when I went to see Titanic together with a few friends and my history teacher at the time and it was lots of crying, lots of crying but joking aside it was a pretty tough story but did your involvement in the music contribute to my crying? I mean, was it such a main part that he meant for the atmosphere to be like that? or how did you get involved in that Titanic story in general?
Peter
Yeah, well, first of all, I think that, you know, music is a huge part of how films and TV shows guide or even manipulate the audience's response isn't it? You know, the old idea of try watching the key moments of something like The Silence of the Lambs or something, whilst listening to some Tom and Jerry cartoon music, you know, it completely changes your experience compared to the music that the film composer had had in mind. Yeah, I'm worried you've got visions of me in a recording studio with Celine Dion or something, I'm afraid that the reality is a bit less glamorous. So I was in a choir and the choir was hired by an American production company to record a library of every single possible choral sound you can imagine so we spent four days recording every note, chord, vocal sound you can imagine, every permutation you can imagine for film score composers to use when writing and recording soundtracks and the product of that was used on Titanic as well as a number of other films in the late 90s.
Maxine
Do you get royalties? If it's used in any film?
Peter
Me personally, no. The choir. Yes.
Maxine
Oh Lovely.
Irina
And I must admit I knew that, Peter. Just to conclude the conversation today. It's been speaking to Peter, continuing with him on another slightly drier angle, again, on notes. What are some common pitfalls that firms need to be really mindful of when actually implementing in practice the guidance?
What are some common pitfalls that firms need to be mindful of when implementing the guidance?
Peter
Yeah, so I think well, first of all, Maxime's already mentioned, you know, applying it particularly to a very large organisation, that the larger you are the higher the expectations from the regulator and also the more difficult it is, so that's obviously a huge thing and I think the risk of not really getting the extent of what the FCA is after here, you know, we've talked about how profound the shift they're looking for and the sort of clear and present danger to firms in a hard headed, you know, reputational and financial sense of incurring the regulator's displeasure if they don't do it properly. Although it should be about more than that. It should be about, you know, good customer outcomes. One of the things I've mentioned, and firms ask us about this a fair bit, we're trying to be careful because we're into legal matters here, but I think firms are still trying to find the right way to handle data on customer vulnerability, where it meets the standard of special category data in in GDPR and it's not easy. Firms want to be able to process data to understand and support customers, not least because they've got these FCA expectations to meet but of course they also want to comply with the GDPR so we probably haven't got time to go into legal details, and I'm sorry, in addition to give anyone any legal advice, firms should consult their own legal advice if they're concerned about this but I think that GDPR requires firms to have a basis for processing special category data. Typically, firms tend to have a basis under one of the articles six such as the performance of a contract and there's another article nine requires an additional basis.
I think that generally speaking, firms can rely on explicit consent and that's fine where the customer is capable and comfortable providing that consent or it's possible for the controller to obtain consent, which is not possible then obviously, that's a much trickier area for firms. As far as I understand it, Article nine or GDPR does provide some further circumstances where a controller can process special category data. Consent is only one reason there are I think, a number of other reasons, including public interest. The Data Protection Act allows controllers to access and process health data without consent, where consent can't be obtained or to ensure a person's economic well-being. So yeah, in practice, this is difficult and as I say, I'm not a lawyer and firms should get their own advice but actually, I was reminded earlier that one thing we've come across, including at HSBC of firms doing is trying wherever possible not to actually record this special category data or try to characterise formally somebody's vulnerabilities for Typically but instead record as the support that they need. So not only does that help you avoid recording special category data it also cements this kind of, you know, person before vulnerability idea that we started with.
Maxine
And Peter, that's exactly the approach that we've taken. So, a good example of that might be that you record the need that somebody can't take a telephone call and that reason might be because they have a particular anxiety and don't really like talking to people over the phone. It could be cognitive difficulties in processing information, or really, it could be that somebody is hard of hearing or deaf. There's lots of different reasons why somebody might say “don't phone me”. Yeah, but actually, the “don't phone me” bit is the bit that we can do something about, we can make sure that we don't call the customer if they've asked us not to. It's kind of, in a way irrelevant. The reason the reason why and like you say, then you don't get stuck in this difficult world of can I record that, it doesn’t focus on what we can do to address your circumstance.
Peter
Indeed.
Conclusion
Irina
Thank you, Maxine. I was just going to ask you that question but thank you very much for picking this up and indeed thank you very much for these absolutely very insightful conversations. I certainly enjoyed speaking to you very much, Maxine and Peter. It's clear that as we commented at the start of the discussion that FCA has got some serious intentions to make sure that firms actually do change what they do in terms of vulnerable consumers as they call them, and firms should react promptly to ensure that they are not falling short the Regulator's expectations.
Peter, you talk through the four different drivers which are really, really important for firms to consider as well as the four kinds of lenses if you like, that the FDA is expecting first to apply across this subject and that they really need to think about understanding their customers’ needs and they have to be really clear with that in communications, they need to make sure that they've got the staff capability and of course that they've got the right tools in place to monitor ongoing how they're implementing that. I think what we've all agreed today is at the heart of all of that is perhaps what's aligned to FCA’s expectation today is that we need to really go back to the drawing board and start asking the right questions from the very beginning and try and assess what we're really trying to achieve here and how we go about achieving it and as Maxine quite rightly said there may be some challenges with implementing this guidance but in fact it is actually an opportunity for firms to demonstrate how much they can do. Thank you very much, once again, absolute pleasure and thank you very much for our listeners for tuning in today.
Maxine
Thank you very much.
Peter
Thanks, Irina, really enjoyed it.
Irina
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