The Financial Conduct Authority (FCA) has set new rules for financial firms, known as the Consumer Duty, to ensure that vulnerable customers are treated fairly and get good outcomes from using financial products, including avoiding foreseeable harm. This includes a focus on identifying and supporting customers experiencing financial vulnerability. To comply with these regulations, financial firms are turning to data analysis tools such as Infinian's Affordability & Vulnerability product, which can help assess financial resilience at the customer level.
The Infinian Affordability & Vulnerability product uses customer-level credit application data to assess financial vulnerability/resilience and estimate disposable income after non-discretionary expenditure. The product applies simple rules to assess financial vulnerability indicators (FVI’s) such as access to credit, loan purpose, income source and level, household make-up (number of dependents, for example) and existing loan payments. The result is a count-based approach to risk segmentation, which can be used for onboarding, periodic review, or trigger events.
One key advantage of the Infinian model is its ability to provide granular customer data, which can help firms comply with the FCA's requirements for supporting vulnerable customers at every touchpoint of the customer journey. For example, firms can tailor their communications and services to meet their unique needs by identifying customers who are particularly susceptible to harm. This could include providing additional support or information, offering alternative products or payment options, or adjusting credit limits or repayment terms.
To illustrate the value of the Infinian solution, a proof of concept could be run on a sample of customers, using the data to generate behavioural insights and Financial Vulnerability Indicators (FVIs). This would help firms comply with the FCA and Gambling Commission regulations around affordability and vulnerability while demonstrating the potential benefits of using granular data to support vulnerable customers in a frictionless manner.
Understanding a customer's level of financial vulnerability or resilience is crucial for tailoring support to assist them in meeting their financial needs and objectives while avoiding foreseeable harm throughout the agreement's lifecycle.
Customers deemed less resilient require tailored support and assistance to ensure that they are treated fairly and not exposed to any harm. By using granular data, we can assess a customer's financial vulnerability and provide insights that can be used to tailor services to their unique needs. This can include offering alternative products or payment options, adjusting credit limits or repayment terms, and providing additional support or information. Ultimately, we aim to help financial firms comply with regulations such as the FCA Consumer Duty and ensure fair treatment for all customers.
In conclusion, financial firms must comply with the FCA's Consumer Duty regulations, which require them to identify and support potentially vulnerable customers. The Infinian Affordability Risk Model provides an excellent tool for assessing financial vulnerability at the customer level and complying with these regulations. By using granular customer data, financial firms can tailor their services to meet the unique needs of vulnerable customers and ensure that they are treated fairly. From origination and throughout the customer's lifecycle, Infinian provides valuable insights that can be used to support vulnerable customers and avoid foreseeable harm.