Needs of some vulnerable consumers aren’t met when seeking help from financial providers, it’s claimed in a Financial Conduct Authority (FCA) report.
Some financial firms take an inaccurate or overzealous approach to the rules, such as those around data protection. Or, policies designed to prevent financial abuse and fraud can ‘inhibit staff empowerment to use discretion’, such as third parties accessing bank accounts. By vulnerable the FCA means those with poor literacy, no internet skills, those with dementia and the aged, who may have trouble recalling answers to personal security questions; or those diagnosed with cancer.
According to the financial sector regulator, many consumer protection policies are designed for a ‘typical’ consumer and sometimes not flexible enough to capture individual situations. If front-line staff can recognise the signs of potential vulnerability, they can more easily refer customers to specialist support, the report suggests. A firm having a policy was not the same as staff knowing what to look for, the report says. The report gives the example of a registered blind person who was asked to go into his bank branch with photo-ID to withdraw cash as his card had been blocked, after fraud. The man did not have a driving licence or passport and the bank would not accept his blind person’s bus pass as good enough ID. He could not get money from his account until new cards were sent. That said, the report made the point that customers do want their bank to act if the bank spots something suspicious that may signal fraud.
As the report points out, if financial services don’t serve customers as they would like, it may create stress or cause more exposure to fraud – for instance, customers may share their debit cards and PINs. The report admits grey areas; that banks are worried about data protection and protecting customers from fraud, and financial abuse – such as family or carers taking money from the accounts of confused elderly people. The report suggests a balance, between putting up barriers to money being taken from accounts if call handlers spot unusual patterns of spending behaviour, or the caller sounds under stress, with training, and awareness about power of attorney and third party mandates. Trading Standards suggests that financial firms can use abnormal patterns as a trigger to contact the customer and check.
Cifas Chief Executive Simon Dukes commented: “Fraudsters are known to target actively those people they perceive to be more vulnerable, so it is of vital importance that financial services organisations do everything that they can to help people to protect themselves from this type of crime. Being a victim of fraud is a very stressful experience, and for individuals who are more vulnerable than others, the impact will be greater. Last year, Cifas launched its own Protective Registration scheme specifically for vulnerable citizens and we welcome the spotlight that the FCA is now focusing on this issue.”
For the 119-page report in full visit the FCA website – http://www.fca.org.uk/your-fca/documents/occasional-papers/occasional-paper-8
The report also gave the case of the wife of a man with a criminal conviction who spoke of difficulties in getting house insurance. “I was getting refused from everybody. Nobody seemed willing to look at our circumstances. Why should I be punished just because my partner has a conviction? Insurers should look at each individual’s circumstances before tarnishing everybody with the same brush. I accept that they may not want to insure somebody with a record of fraud, but at the moment they just refuse to cover anybody.”
Further reading
Graham, W. (2014). A Quantitative analysis of the victims of investment crime: www.fca.org.uk/static/documents/research/quan-study-
understanding-victims-investment-fraud.pdf
