Collaboration the best way to serve vulnerable customers

Here at StepChange we’re currently focusing an internal spotlight on how we provide services to our vulnerable clients…

…or, perhaps I should say, our most vulnerable clients. In reality, I think all our clients are vulnerable. After all, being in problem debt is not a comfortable place to be. That said, around one in five of our clients at the point they contact us faces an additional vulnerability, and needs more specific, tailored support.

All firms grapple with how best to build into their operations the right kind of communications and relationships with people who face additional challenges, and we are no exception. As we all know, “vulnerability” is clumsy shorthand for a large variety of different situations. The individuals involved may well not regard themselves as vulnerable, even when they identify their situation as problematic. It’s up to us to listen hard, and to be attuned to the clues that can help us identify their potential specific needs, on top of the normal service we would provide.

I’d like to share with you some of our findings about our clients, and some of the work we’re doing, in the hope that you may find these useful and enlightening. We are actively talking to many sections of the credit industry about the treatment of customers with additional vulnerabilities already, and we recognise that we can learn from firms, as well as vice versa. This area of work should, in my view, be one of collaboration and not competition.

So, in that spirit, you might be interested to know that we advised just under 29,500 people last year who had an additional vulnerability on top of their debt.

Among these, 43% identified a mental health issue as their main vulnerability – consistent with wider evidence suggesting a strong coexistence between financial problems and poor mental health. While mental health was by far the most commonly cited vulnerability, 4.7% of clients had a physical disability, 4.6% had cancer, and 4.1% had other health issues. There are many more reasons why people may be vulnerable at a particular point in time. Bereavement, relationship breakdown, family or work problems, language barriers, or the way in which people are treated by firms could all potentially result in people facing additional difficulties at the same time as trying to deal with their problem debt.

One of the pieces of work we are currently doing is a deep dive analysis of client outcomes, at various points after they receive advice. We want to understand among all our clients – but especially clients with additional vulnerabilities – how they experience our service, how far they successfully resolve their debt problems, and how we can improve the way in which we support them.

What is less easy to determine is how often someone’s vulnerability is the reason for their debt – and how often it’s the other way round. Among our clients, 77% of those with a terminal illness, and 68% of those with cancer, said their illness was the main reason for them falling into debt. Among those with mental health issues, the proportion was much lower, with 40% saying that this was the reason for their debt problems. We can only surmise how many would have cited their debt as the reason for their mental health issue, on the other hand.

We do know that our clients with additional vulnerabilities tend to be older, and to have a lower monthly income, than our clients as whole. They are also much more likely to have a deficit budget, even after budgeting advice. Over two thirds of vulnerable clients receive some income from benefits, compared with half of our clients as a whole – but those benefits were less likely to help them avoid a deficit budget. Clients with additional vulnerabilities are more likely to be in arrears on household bills, and they spend over 70% of their income on household bills and food, compared with 60% for clients as a whole. Among our clients, at least, vulnerability is associated with a worse financial position.

So, as the data shows, there are good reasons for trying to improve the lot of people whose circumstances mean they have additional vulnerability. Challenging situations happen, but debt should not be an inevitable association with them.

The more that lenders focus at an early stage on getting the right framework in place for vulnerable customers – including at the sales stage, and not just the collections stage – the less likely it is that those customers will need the services of a debt advice charity. Giving vulnerable customers less to worry about and have to deal with can only be a good thing, across the whole credit industry.