March 25th saw the publication of the Financial Conduct Authority’s (FCA) key findings in relation to Coronavirus related forbearance.
With the Office of National Statistics (ONS) reporting that unemployment reached its highest levels in 5 years, and with forecasts suggesting we might reach the highest levels in almost a decade, the treatment of financial services customers is under the greatest spotlight since the Global Financial Crisis (GFC) of 2007 – 2008.
The FCA’s findings on household finances, informed by their Financial Lives Survey are eye opening.
- A third of households expected income to fall between October 2020 and March 2021
- One in four households struggled to “make ends meet”
- One in ten households accessed a food bank
- 70% of those taking a mortgage holiday would have seriously struggled without it
- Almost half the borrowers taking out high-cost credit required further support after the initial payment deferral period
The report highlights the importance of lenders implementing the 2020 Tailored Support Guidance (TSG). It lists the impact that TSG implementation has had on customers:
- Greater support available for customers leaving payment deferral periods
- Customer demand has been broadly met with firms working to increase the capacity to deal with arrears either through recruitment or the use of third parties
- Training and competence is vital to ensure that new, less experienced staff do not present an adverse risk to customers in financial difficulty
- Greater automation in the customer forbearance journey
The report emphasises the importance of implementing the TSG. There are a number of nudges for firms yet to implement the TSG and a warning that, where they identify concerns over a firm’s approach, the supervisory response will be robust. They have helpfully signposted their priority areas for continued review to ensure that:
- There are proportional levels of support to assist all customers
- There is fair treatment of vulnerable customers and those customers in financial difficulty
- Quality Assurance processes are robust, reliable and that findings are acted upon accordingly
- New staff are properly trained to identify customer vulnerability and improve customer outcomes
- Automation of forbearance processes provides customer benefit
As the regulatory focus continues in these areas, FourthLine is supporting customers with advice, recruitment and resourcing support.
For further insight on customer vulnerability and how we can support your programme, you can download our insight deck HERE.