How and Why Your Firm Needs to be Recognising Financial Difficulties

Financial difficulties can affect anyone at any point in their lives. Fincap.org suggest that almost nine million people in the UK are in serious debt at any one time, and only a third of those receive help. Although on average those in financial difficulties are more likely to be women, living on lower incomes and those with mental health issues, the Covid-19 pandemic has meant that more people than ever will find managing their outgoings against their income more difficult than usual.

This week we’re going to focus on the lived experience of financial difficulties – something that many of us will encounter at one stage of our lives or another. And it can be extremely difficult to speak to someone you don’t know about your own problems, for a number of reasons. We might not want to risk oversharing or cause a fuss, and we might feel shame. We might not want people to judge us harshly – societally, lack or loss of money has been connected to a lack of personal control, or poor habits, rather than society viewing financial difficulties as something that can happen to anyone. Or we might not believe that the firm has a right to know, or can help us.

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In financial services, most firms will have a financial difficulties policy and will be aware of specific regulatory rules and requirements around the fair treatment of those customers. A process might set out some steps that can be taken with customers in arrears. But process and adherence to specific rules are only part of the picture. With financial difficulties, the key must be frontline staff, who are able to identify and speak to customers who are starting to struggle, to gather all the information they need to understand the customer’s situation and what type of support is best suited to their situation.

It sounds trite to say that supporting customers in financial difficulties – especially in the current economic climate – is one of the most important things that a firm can do this year, but it’s true. On a personal level, it can make a huge difference to individual customers to speak to someone who can listen and offer a kind word, especially where they may have been expecting more severe treatment. This alone can have a real impact on someone’s mental wellbeing. Proper support, offered early enough, can also make the difference between someone spiralling into debt and keeping their head above water. If enough customers are helped in this way, then this will have a positive impact on financial health across the UK.

So what can firms do to help these customers?

Recognising indicators that someone might be struggling with their finances sounds basic, and it sounds easy. But it isn’t. Especially where someone might be very keen not to share what they think of as personal details.

Initially, the first sign of difficulty could be visible in patterns on their account. So solid indications that someone has been withdrawing more money than usual on a credit card – which carries charges – is an example that someone might have no other choice to access money. Staff who have experience and training know to look out for ‘red flags’ or minor indicators in what or how the customer is saying something. Any mention of difficulties or money problems are a given and need following up, but there are some more subtle signs as well – noticing income suddenly ending or reducing on an income and expenditure form could indicate that someone has lost their job, a customer mentioning repeated hospital visits could mean they’re not currently working, and divorce or the loss of a loved one could mean that their financial stability has changed.

Some people will feel fairly comfortable in sharing their circumstances. But those who don’t may have reasons for holding that information back, so an experienced member of staff can use a number of methods to help someone feel at ease – often this is enough to start the conversation. Using the right tone is a key technique. Finances can be a fraught subject for anyone, and most of us will know how daunting it is to speak to a stranger about anything personal – when the subject is financial difficulties, it’s all the more important for staff to let the customer know they’re a friendly ear. In these circumstances, frontline staff can help the customer by letting them know they’re not – by any means – alone, that there are lots of other customers in similar situations, and that the firm is able to help them. This is often all someone needs to hear to open up and start speaking about how they’re affected, which is what staff need to know to be able to choose the right support option for the customer.

These skills are notoriously difficult to pick up ‘on the job’. Many people are concerned that they may say the wrong thing or offend someone, and so avoid beginning the conversation with the customer at all. As we move into 2021, it’s more important than ever that customers in financial difficulties are identified early – this helps to keep them and the economy afloat. Firms benefit too – customers keep coming back to firms they know they can trust, the FCA has made clear they’re prioritising the fair treatment of customers over the coming months, and customers who can be helped at an early stage are more likely to be able to meet their debts in the long run.

Training staff gives them the confidence to speak to and support customers in financial difficulties. Our dedicated course takes learners through techniques that have been tried and tested, covers questioning skills, empathy and active listening, what to say, when to say it, and how to support customers. It also covers recording of the customer’s personal information in line with the General Data Protection Regulation and the Data Protection Act 2018.

This online course, priced at just £15, is accessible at the delegate’s convenience, and provides a certificate upon successful completion, allowing firms to track and record each user’s progress. For large groups, we can offer a simplified enrolment service and pricing, simply email Robert.bell@rbcompliance.co.uk.