Vulnerable. It’s a curious word. Many of us don’t like to identify ourselves as vulnerable, although maybe on some level we all are – surely that’s what makes us humans? But we know acute vulnerability when we see it, and the way we approach it speaks volumes about our values. Some will apply reflection and sensitivity; others will ignore it or exploit it.
The same is true for financial companies. While some care little about vulnerability – hello, payday lenders – the more traditional stratum of finance knows that blatant exploitation creates a bad outlook.
This is why many banks are talking about a big game when it comes to “accountability” and “financial inclusion”, with many references to supporting vulnerable clients with their shiny websites and corporate nerve.
So, it is disappointing (but not entirely surprising) to learn that almost half of all vulnerable young people feel they have been treated unfairly by organizations meant to help them. This is according to the Vulnerability Registration Service (VRS), a non-profit service that offers the UK’s first central and independent registry of vulnerable clients.
It was created in 2017, around the same time that the Financial Conduct Authority (FCA) started talking about the need to protect people from possible financial disasters, harmful psychological tendencies and scams by financial companies.
At that time, the FCA had identified that up to half of the population could be defined as “vulnerable”, especially when it came to borrowing money.
Since then we have had the pandemic and clearer fault lines have emerged. FCA’s most recent research in this area found that vulnerability and what it calls “low financial resilience” has increased by more than 40% among young adults aged 18-34, while vulnerability decreased slightly among retirees.
This confirms a broader shift in our politics and our economy, a shift that upsets conventional thinking. Traditionally, retirees have been at the heart of policies and regulations designed to prevent harm, which has led to concessions such as the winter fuel allowance and the ban on cold calls for pensions.
In contrast, 18-year-olds are widely considered to be full adults. Some may qualify for training programs and / or additional benefits outside of universal credit. Otherwise, the main message is: “You are alone, kid”.
Psychologists, however, will tell you that the brains of young people are still
‘Adolescent’ well into their twenties: Our prefrontal cortex, which is responsible for reasoning, planning, judgment and impulse control, is not fully formed until around 25 years of age.
Then consider this new research from RSV, which found that 39% of 16-24 year olds are more likely than other age groups to have a mental or physical health problem that affects their ability to perform daily tasks, for example. compared to 27 percent of all adults.
More than a quarter say they have experienced a traumatic life event, such as bereavement, job loss or relationship breakdown, compared to 19% of all adults.
Talk about growing up fast. How the hell did we find ourselves in this situation, with so many young people going through such difficult times at such an early stage in their lives? I’ll let others draw broader conclusions. For now, let’s look at where financial services, utilities, telecommunications, local governments, housing providers (and indeed the regulator) could do better.
First, the VRS signaled the “urgent need” for smarter support and increased training for frontline staff. More than a third of young vulnerable consumers say they have moved from one pillar to the other when dealing with providers, which makes life difficult for them, but about half do not think they can complain.
Young people are also the least likely to reveal their vulnerability to providers, either because of bad past experiences or because they fear they will not be listened to. All of this says a lot about how companies treat vulnerable young consumers at the point of contact, perhaps because there is little awareness of what to look for and how to ensure that young people feel respected in these interactions. Great room for improvement there.
Second, the FCA may have tips for businesses on how to deal with vulnerable customers, but is everyone paying attention? Almost half of vulnerable youth say they have been offered more debt, gambling options or a payday loan this year.
I really wonder how the people behind these deals, knowing full well the carnage they cause, can sleep at night. And yet they do exist, which means that regulations designed to protect the most vulnerable are insufficient. We need to get more at-risk groups onto the financial radar; we could get detailed accounts of where these dastardly outfits operate and connect them.
In the meantime, check out the vulnerabilityregistrationservice.co.uk website if you or someone you know could benefit from a free and easy way to report issues to financial providers. No longer struggle in silence.