Are you ready for the new consumer duty rules? Identify vulnerable customers, comply with regulations, and protect your reputation with AI

The Financial Conduct Authority (FCA) states that many U.K. financial brokers and dealers have a lot of work left to meet a looming deadline for new Consumer Duty rules. Described by the FCA as a “major shift” in the U.K financial services regulatory landscape, the rules will have a significant impact on everyday business conduct and processes.

The purpose of the rules is to drive conduct and culture in the industry, including ensuring that firms:

  • Act to deliver positive outcomes for clients at every stage of the customer journey and across all customer touchpoints.
  • Take all reasonable steps to avoid foreseeable harm to customers.
  • Consistently act in good faith with customers.
  • Consider and meet the needs of those who could be classified as “vulnerable customers.”

Protecting vulnerable consumers is a key focus for the FCA—and one the agency considers “more important than ever” due to the impact of the COVID-19 pandemic, says Nisha Arora, Director of Consumer & Retail Policy at the FCA. The guidance is designed to improve how firms treat vulnerable consumers, so they are consistently able to achieve outcomes that are just as good as the larger population. A study by the agency found a sharp increase in the number of consumers who found themselves in vulnerable circumstances due to the pandemic.

How AI helps identify vulnerable customers

It’s not always easy to identify or handle vulnerable customers. Contact centres rely primarily on frontline staff to identify vulnerable customers, but it is often difficult to discern or determine the subtle clues of vulnerability. Manual sampling of interactions to ensure that vulnerable customers are properly identified can’t scale to include all interactions. Traditional speech or text analytics tools analyse all interactions but have low identification accuracy rates, because they can’t always capture all of the combinations of words and phrases used during an interaction that can help identify a vulnerable customer. And, many customers may not disclose—or even be aware—that they are vulnerable.

Artificial intelligence can help firms overcome these challenges. AI and analytics can efficiently automate the identification and classification of vulnerable customers and help firms operationalize the remediation process and demonstrate compliance to regulators. NICE Enlighten AI for Vulnerable Customers includes models that have been trained and tuned specifically to analyse interactions for customers who meet the FCA drivers of vulnerability, which include:

Health – Both physical and mental health issues covering a wide range of illnesses or health conditions that affect someone’s ability to carry out day-to-day tasks

Life Events – Major life events such as bereavement, job loss or relationship breakdown

Resilience – A low ability to withstand financial or emotional shocks

Capability – Low knowledge of financial matters or low confidence in managing money (Other relevant areas include literacy issues or limited digital skills)

Applying Enlighten AI’s purpose-built models for vulnerability that are in NICE quality and analytics applications can help financial services firms:

  • Identify and classify vulnerabilities with accuracy and speed: Automatically score and classify every interaction based on the FCA drivers of vulnerability, complaints, customer sentiment, and more, enabling businesses to act based on the results and be in compliance.
  • Embed compliance in business practices: Respond to sensitive, high-risk vulnerabilities and complaints proactively with automated remediation workflow rules that prioritize and escalate interactions that need immediate attention.
  • Upskill frontline staff to manage vulnerable customers and deliver good outcomes: Give advisors access to the specific behaviours that have been proven to meet the needs of vulnerable customers and compliance guidelines. Equip contact centre supervisors with immediate visibility into their teams’ overall performance dashboards as well as each individual agent’s performance.
  • Promote staff well-being with accurate notetaking and transcripts: Generate accurate interaction transcripts to uncover areas for performance coaching and improvement. Give supervisors access to call recordings that are analysed to capture any events that indicate compliance or noncompliance during an interaction, so they can target coaching for compliance.
  • Uncover the drivers of vulnerability and stay ahead of compliance: Measure customer vulnerabilities as part of the contact centre operational dashboard and reporting. Consumer vulnerabilities and complaints are potentially a symptom of a product, process, or skill-based issue and can directly impact customer retention, new business acquisition, and operational costs.

Learn more about what your firm needs to know in advance of the July 2023 deadline for the new Consumer Duty Rules—and how AI can help you achieve compliance and deliver optimal outcomes for vulnerable customers—in our Intelligence Pack, Achieve Consumer Duty Compliance and Fair Outcomes with Artificial Intelligence.”