![Logo[1].jpg](https://static.wixstatic.com/media/94cd04_f19ec68826ff46fe9ef76eb000435b8e~mv2.jpg/v1/fill/w_238,h_121,al_c,q_80,usm_0.66_1.00_0.01,enc_auto/Logo%5B1%5D.jpg)
Helping with the Cost-of-living in the Run-up to Christmas
As the UK gears up for the Christmas period, marked by a significant rise in the cost of living, financial services firms face a unique set of challenges. This period traditionally alters consumer behaviour, as people indulge in extra purchases to celebrate Christmas, the holidays and New Year. This is the first Christmas following the implementation of the Consumer Duty, and with the old Tailored Support Guidance due to be amalgamated into CONC in 2024, supporting customers to bridge this difficult period, with an eye on compliance, should be a priority.
RELATED ARTICLES: Operational Resilience and Accountability
RELATED RESOURCES:
As December comes to a close, it's crucial for financial services firms to proactively identify customers who may be at risk of financial difficulties during this challenging period. Traditionally, most identification of customers who may be at risk of, or who might be in the early stages of, financial difficulties is undertaken by front line staff. To be able to do this appropriately, it’s vital that up-to-date training is given, including refreshers, so that early indicators of difficulties are picked up at the soonest opportunity.
This identification process can also be effectively supported through data analysis. Firms should be using management information to analyse spending patterns, account behaviours, and credit usage spikes, particularly those deviating from typical trends. These metrics can be early indicators of financial stress.
An awareness of how the target market is experiencing the cost-of-living crisis should inform these granular analyses. Good, pointed use of macro-data can support an understanding of the impact on the target group which helps build a clear path for design of useful support options. This doesn’t need to be difficult either. The FCA’s financial lives recontact survey – while not entirely up to date, having taken place in January 2023 – gives a clear view of the impact of the cost of living on customer groups. The last full iteration of the survey – taking place in May 2022 - shows a clear drop in the proportion of consumers who are able to save or invest and an increased difficulty in meeting essential spending, particularly from those who are unemployed, low-income or renters.
Additionally, engaging directly with customers through targeted, empathetic, communications can encourage them to disclose potential financial challenges they foresee in the festive season. Such interactions not only foster transparency and trust but also enable firms to offer timely support and advice, aligning with the FCA's expectations for treating customers fairly and responsibly. A transparent communication that puts customers at ease, setting out the support that’s available, and making it clear that customers will not be penalised for being identified as experiencing financial difficulties, could make all the difference in encouraging early engagement.
The compliance landscape is rapidly evolving, influenced by factors like increased demand for credit products and the heightened need for fair treatment of customers. Senior management and boards play a pivotal role in this. They must not only ensure compliance with existing regulations but also anticipate and prepare for emerging risks associated with the cost-of-living increases.
As we approach the festive season, it is more important than ever for firms to be proactive in support of customers at risk of financial difficulty. The governing body must be attuned to the economic realities, making informed decisions that uphold both customer interests and regulatory requirements.
The rising cost of living poses both challenges and opportunities for financial services firms. By embracing a proactive and informed approach to compliance, firms can not only navigate these challenges successfully but also reinforce their commitment to customers’ financial wellbeing and regulatory compliance.
With Christmas just around the corner, ensuring customers in financial difficulties are fully supported is essential. Our online training courses introduce new staff to regulatory requirements, key legislation and process, and offer excellent refresher training for established staff, with up-to-date scenarios and soft skills training. Our Financial Difficulties course is priced at £20, it's accessible at the user’s convenience and provides a certificate upon successful completion.
Comentarios