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The word vulnerable conjures images of weakness and susceptibility. Since March 2020, vulnerability has most frequently been used within the health industry, in relation to both physical and mental wellbeing. In the debt space, every consumer that is financially distressed is classed as vulnerable.
With so many of the population recently unemployed, furloughed or on reduced incomes, compounded by the existing level of financially distressed individuals and families, can we really say that a fifth of the adult population is weak? Or is it our opportunity to use the pandemic, a time when change can happen rapidly, to move from framing vulnerability as ‘weakness’ and instead think about it as ‘consideration’.
How much impact could it drive if those individuals and their situations were considered for a moment longer across all their interactions? What would the design of products and services look like if this consideration was not the exception but the standard? Would behaviour change if individuals were empowered?
Consideration means extra thought. Society has become accustomed to thinking about putting the most vulnerable, in terms of health, ahead of the individual over the last 10 months. Can this attitude be adopted across all vulnerability types?
In the closing quarter of 2020, it was really encouraging to see the FCA launch their pilot of the digital sandbox initiative, specifically addressing vulnerability as a key criteria. There is excellent work ongoing by multiple firms and individuals leading in this area but how do we deliver the necessary assessment, support, advice and regulation when the multitude of vulnerabilities is so vast and the circumstances so varied?
As most debt advisors will explain, establishing the additional vulnerability to financial distress can be difficult and often a very sensitive subject. According to Money and Mental Health, half of adults in problem debt have a mental health problem and are twice as likely to develop major depression compared to those not in financial difficulty.
While developing our machine models at Cerebreon, we processed 15 million insolvency documents and these covered a diverse range of vulnerability such as literacy, language barriers, isolation and depression…to name a few. However, while refining our financial assessment tool, we realised that vulnerability shows up in spending patterns, and not just on what the expenditure was used for but also how it was prioritised against other outgoings. Deeper analysis around the time of the expenditure clearly revealed that different psychological behaviours were emerging. This is the core of the analytics indicators that allows us to identify when an individual is under serious pressure.
In observing this ourselves, we started to look outside for specialists in this topic and are delighted to have partnered with the Vulnerability Registration Service (VRS) to bring an additional lens into the 360o view of the consumer. The VRS is driving this consumer self-led, innovative approach to vulnerability. It provides the consumer with a single point of reference in a very overwhelming situation to record their circumstances and protect themselves. By integrating with the VRS, our platform can provide any vulnerabilities associated with the consumer instantaneously to professionals in the debt industry so they can minimise the risk that otherwise might be overlooked. In essence, we highlight those that need additional consideration.
With the expected volume of financially distressed individuals due to rocket, and the high levels of associated mental health issues, it is so important, now more than ever, to ensure that the information about a consumer is accurate, conclusive and as close to real-time as possible so that the right advice and resolution can be achieved.
Quality won’t suffer in the face of volume when consideration is given to those who need it most. To achieve this, vulnerability must become as normal as the AML and credit check procedures, but the question is: are the firms technology ready?
If so, it’s our industry’s time to shine.