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Why banks need to focus on customer care and vulnerability

18 December, 2020Ouida Taaffe

The economic upheaval of the Covid-19 pandemic means bank staff have to support increasing numbers of vulnerable customers. Here are some of the challenges that relationship managers and customer service professionals need to consider.

Old hands on a person's lapEddie George, the former Governor of the Bank of England, once appealed to the financial services community to be “good for goodness’ sake”. That was not a Christmas message. Proper conduct is something that regulators want banks to focus on all year round.

This year, furloughs and job losses have made many people vulnerable. When people suffer stress and trauma, they can find it harder to make good decisions.  

Personal values and professional ethics

Most of us want to ‘do the right thing’. But what people consider to be ‘right’ varies from person to person and can depend on the circumstance.

Personal ethics should go hand-in-hand with the professional ethics required of employees by their company or profession. In a bank, employees have to follow financial regulations and the professional standards of their firm.

That doesn’t mean ticking boxes.

Punctuality, confidentiality and transparency might not sound like virtues but they are the business expression of personal ethics like honesty, care and sincerity.

The rules on customer care in banking

Buying a financial product, or making a financial transaction is not like most day-to-day dealings. Banking is highly regulated because of the potential for long-term harm to customers. Life opportunities can be at stake.

The Financial Conduct Authority (FCA) has 11 principles of business conduct designed to protect society. When dealing with customers, you must make sure that:

  • you tell them everything they need to know about a financial product, including all the risks, to be sure they get “clear and accurate information”
  • the information is appropriate to the customer’s needs and presented in a way that they understand
  • they know where and how they can complain if they are unhappy.

Applying the FCA's customer care rules

Those principles of conduct are clear and sound straightforward, but they require thought to follow in practice.

For example, customers may not understand what seems obvious to a professional – even when they are warned. That is why making payments to scammers is common in the UK. In 2018, 84,000 people lost money to fraudsters. The figures for 2020 are expected to be much higher, thanks to lockdown.

UK banks set up a voluntary code and a central fund in 2019 that pays scam victims when neither the bank, nor the victim, is to blame. But even if the money is repaid, the customer can still suffer. For example, they may find that their credit score is affected.

That’s why customers rely on banks to help protect them against fraud and deal with any losses.

In December 2020, the Lending Standards Board published a review of effective warnings on scamming. One recommendation was that staff shouldn’t always stick to a script when discussing potential scams with customers. That way, banks can learn from those conversations.

Threats to ethical behaviour

If a bank has clear rules and procedures in place, and follows all the best codes of practice, customers will be treated properly, right? Not necessarily. Even the best guidelines are only as good as aims of the people implementing them.

Ethical behaviour can be threatened by a number of factors, including:

  • time and workload pressure
  • self-interest, for example, if a bonus or pay rise looks possible, and
  • bias – whether unconscious or not.

It all comes back to entwining personal and business ethics and applying them sensitively in a business environment. That’s why banks need to train their staff in ‘doing the right thing’. 

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