Concerns that vulnerability assessments may be biased are unfounded and could be hindering firms from meeting their Consumer Duty obligations, customer vulnerability specialist MorganAsh has warned.
New data from the MorganAsh Resilience System (MARS) indicates minimal differences between vulnerability assessments carried out by agents or advisers and those completed directly by clients.
Across the 100 vulnerability characteristics assessed, advisers identified just 1% more vulnerabilities on average compared to clients self-reporting.
For the most severe characteristics, the variation was even lower, at just 0.1%. In over 90% of cases, the difference between the two methods was less than 2%.
MorganAsh argues that firms delaying assessments due to concerns about bias risk failing to meet regulatory requirements.
Managing director Andrew Gething said: “Despite the clear remit from the FCA and Consumer Duty, many firms hesitate to assess customer vulnerability over fears that their methods may introduce bias.
“While our data is not definitive for every type of business, it consistently shows that bias is far less of an issue than feared.
“Benchmarking data across different methods, distribution channels, and offices, as well as against the FCA’s own data, is the best way to evaluate effectiveness.
“Regardless of the approach, firms need a clear classification system to ensure consistency and enable meaningful analysis.
“MARS applies an objective severity scale to each characteristic, generating an overall Resilience Rating for each customer.”
Firms need help to better identify vulnerable customers
The MARS system updates with every assessment, allowing firms to track changes over time and report findings throughout the distribution chain.
This not only supports compliance with Consumer Duty but also aligns with the FCA’s push for improved data quality and greater oversight of outcomes for vulnerable customers.
The data reveals that customers are more likely to self-report mental health, mobility and digital interaction challenges, whereas agents and advisers tend to identify more issues related to carer responsibilities and employment.
The findings are based on a two-year data set collected from firms across multiple sectors, including credit, debt, mortgage broking, independent financial advice, wealth management, insurance and building societies.
While the results may not be fully representative of all businesses, MorganAsh believes they highlight the importance of data-driven decision-making.
Alongside agent and customer assessments, MorganAsh also leverages existing databases of vulnerable individuals and nurse assessments to help firms identify and support vulnerable customers.
