27th Apr 2016
One in three people in the UK would identify themselves as financially vulnerable, while one in five customers do not have enough savings to cover an unexpected bill of £300, a study from management consultancy Baringa Partners has found.
Of those surveyed, nearly one in 20 customers have been worried about money in the past month and do not have enough income to cover their basic needs.
The study, which assessed how much support the energy and banking sectors are providing for these customers, shows that while some services exist to support those facing financial difficulty, the overwhelming majority of customers within this subset are yet to be identified as financially vulnerable by their service providers.
Energy bills present a constant concern for these consumers. According to Baringa’s study, only one in four vulnerable customers can easily understand their bills, and more than half expect providers to make this information clearer and easier to digest. Among those experiencing ‘serious financial difficulties’, only one in three felt they had access to services that meet their needs.
Within the banking sector, only 4% of customers who identify themselves as financially vulnerable have been recognised as such by their bank or building society. Almost two thirds of this group struggle to understand the communication they receive from their bank.
However, consumers who have talked to their bank or building society about their financial situation reported an increase in trust, suggesting businesses that approach customers about their financial situation, and offer support, would gain their trust and loyalty.
Vanessa Clark, a director at Baringa Partners, believes the study’s outcome is clear: both sectors need to do more for vulnerable customers. “Service providers need to adapt their approach and products to support these people in need,” she says. “Through better identifying vulnerable customers and offering competitive tariffs and clear communication, firms can win customer loyalty and get ahead of the competition.”