An estimated £41bn worth of vulnerable customers’ money has been attached to poor outcomes from financial services providers, according to a new study.

Research by consultancy firm Newton indicated that more than half of the UK population (56%) have applied for a financial product online in the last 12 months. Of those who did, Newton found that 82% have a condition or experience which makes them more likely to be vulnerable to harm.

Under the FCA’s new Consumer Duty rules, coming into force at the end of July, financial services providers will have a regulatory duty to avoid causing foreseeable harm and drive good outcomes for customers, especially vulnerable ones.

However, almost half (49%) of those consumers who have undertaken a financial journey online – which might include applying for a current account or a credit card, renewing a mortgage, or setting up an ISA – either didn’t get what they needed, weren’t sure they got what they needed from that financial services experience, or got an ambiguous or poor outcome.

Newton’s study, conducted among 3,007 general consumers, revealed that 90% of these customers facing poor outcomes have vulnerable characteristics. When equated to reflect the UK population at large, this infers that potentially 13 million vulnerable customers who applied for new products via digital channels in the last year, didn’t get what they needed from that experience.

These poor outcomes are attached to approximately £41bn in vulnerable customers’ money, Newton warned, specifically their balances attached to the respective products generating said outcomes.

Vulnerable customers who took out debt products – including loans, overdrafts, mortgages and credit cards – or started investing in the last 12 months could be disproportionately more exposed to the Consumer Duty risks of ambiguous outcomes than lower risk deposits.

“Most customers, old and young, vulnerable and not, prefer digital channels when using financial services,” partner at Newton, Junaid Mujaver, commented. “Yet vulnerable customers are often neglected when designing mobile and website journeys, whether that’s taking out a new product or managing finances day to day.”

Mujaver added: “There has of course been significant investment in digital journeys by financial services organisations, but they are still not fundamentally designed to account for vulnerability and how people process information differently.

“This poses a significant challenge for design teams; there are lots of vulnerabilities to consider and lots of types of customers to cover. It’s critical that firms use robust and proven methods like cognitive and behavioural psychology to assess, review, and solve the issues.”

Share Story: