Half of all credit consumers in are ‘in difficulty’, MorganAsh finds

Almost half (49%) of all consumers in the credit sector are ‘in difficulty’, MorganAsh has found.

Using data from the MorganAsh Resilience System (MARS), it has found that in the mortgage sector, over a third (38%) of mortgage consumers were also in the ‘in difficulty’ sector.

MARS data is divided into 10 categories, from ‘very vulnerable’ to ‘very resilient’. However, for ease of reporting, this has been summated into three groups, ‘in difficulty’, ‘potentially vulnerable’ and ‘resilient’.

MorganAsh launched its MARS platform in March last year to help firms understand and monitor vulnerable customers and deliver good outcomes – as required by Consumer Duty. It is in use across financial services and the utilities sector, enabling businesses to adopt a consistent approach to identifying vulnerable characteristics and generate an objective resilience rating – much like a credit score.

The protection sector has the smallest proportion of customers ‘in difficulty’ with just 5% being identified in this sector, followed by equity release at almost a quarter.

However, equity release has a higher proportion of ‘potentially vulnerable’ customers at 43%, as a result of the demographic of the later lending sector.

The highest proportion of consumers in the ‘potentially vulnerable’ category are in the high-net worth sector (49%) and protection (44%).

Across all sectors, nearly one in five (19%) of consumers are classified as ‘in difficulty’, where I is most likely that some action or adaption is required. Nearly half (45%) of consumers are in the ‘potentially vulnerable’ meaning they are still classified as vulnerable, but the severity is not as great, and as a generalisation, an intervention or change of process is less likely to be needed.

In the mean results, just over a third (36%) were found to be ‘resilient’.

Managing director at MorganAsh, Andrew Gething, said: “It is still early days from the introduction of Consumer Duty, but some firms are starting to provide good data on the vulnerability of their customers. We should emphasise that our data is representative of the firms we are working with, so should not be taken as gospel. While every consumer is unique and each firm will have a different set of consumers, there is real value in benchmarking ourselves across different sectors.

“Worryingly, there is still a huge disparity in views on the proportions of vulnerable consumers at any one time. Some firms are still stating that they don’t have any vulnerable customers, even though we are all vulnerable at some point in our lives. The recent Dear CEO letter, issued by the Financial Conduct Authority, highlighted the prevalence of this view among wealth management and stockbroking firms in particular.

“Hopefully publishing the mean figures will help firms to judge their own figures against these industry norms.”

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