Firms using vulnerability assessments for their Consumer Duty compliance are identifying a similar number of vulnerable clients as the Financial Conduct Authority (FCA), data from the MorganAsh Resilience System (MARS) has found.

MorganAsh launched its MARS adviser tool in March 2022 to help firms understand and monitor vulnerable customers and deliver good outcomes, in line with Consumer Duty requirements.

As a result, businesses can, through clear and consistent assessments, identify vulnerable characteristics and generate an objective resilience rating, much like a credit score.

MorganAsh’s tool found that in three key age brackets, 25-34, 35-44 and 45-54, MARS users reported a similar proportion of vulnerable people as the regulator.

In the older age brackets, 55-64 and 65 and over, MARS users were able to identify a higher amount of vulnerable people, with 83% of over-65s identified as vulnerable, compared to the FCA’s findings of 60%.

However, MorganAsh said that it believes the FCA’s use of ‘over-65’ as a category could contribute to the disparity, especially as many high-net-worth firms record wide variations in age brackets older than this.

The firm said the regulator’s financial lives survey from 2017 provides an important benchmark for vulnerability by age range and is statistically valid with over 13,000 responses. The survey also found that around half (50%) of consumers in the UK had some sort of vulnerability.

Managing director at MorganAsh, Andrew Gething, said: “If you don’t benchmark, there’s no way to find out how you compare to others, how you can improve performance, spot inefficiencies or determine the best cause of action when changing or updating processes. The benefits of using benchmarking to manage consumer vulnerability and compare against best practice cannot be emphasised enough.

“Of course, Consumer Duty is new, so there are few battle-tested benchmarks, and most companies won’t have annual or comparable data to compare with their peers. But there is a decent place to start. The FCA’s financial lives survey has provided some good data.

“While the MARS data will depend on response rates and the make-up of each firm’s customer base, this analysis does show that the processes put in place by firms to assess and monitor vulnerability are working. Although crude, the proportions of vulnerable customers identified is a very simple measure, and hence easy for firms to report and monitor. Far too many firms are still only reporting proportions of vulnerable consumers in single figures and quite clearly their assessment processes are just not fit for purpose.”

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