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20 July 2023

Claims and the Consumer Duty – are all protection claimants vulnerable?

Claims and the Consumer Duty – are all protection claimants vulnerable?

Phil Deacon
Head of Claims

Are all protection claimants vulnerable? We think a reasonable interpretation of both Consumer Duty and related vulnerability requirements is that they are.

Indeed, the regulations highlight what we’ve always known – that customers can be at their most vulnerable when they come to claim. The duty now gives the sector an excellent opportunity to review and assess our approach.

We know every claimant is very likely to be exhibiting at least one and perhaps two of the characteristics of vulnerability, at least temporarily. For example, what constitutes someone being vulnerable – or potentially vulnerable – include health conditions or illnesses that affect the ability to carry out day-to-day tasks, and major life events such as bereavement or relationship breakdowns. A claim will certainly involve one of these and it could obviously involve both.

It’s worth saying that other characteristics of vulnerability, such as a lack of resilience to financial or emotional shocks, or lower capability such as low knowledge of financial matters and low confidence could also apply to claim, although perhaps more to surviving family members than most protection clients.

The Financial Conduct Authority (FCA) has placed the onus on firms to decide how they will implement the duty across their business to reflect the principle, four outcomes and three cross-cutting rules.

We believe – when thinking about claims – the consumer support outcome, with its emphasis on support for customers with characteristics of vulnerability is the most relevant. This applies whether it is the policyholder themselves or their partner or other family members.

When it comes to how our team deals with claims, our internal approach involves listening, using empathy, practising curiosity and avoiding judgement without sufficient knowledge, all of which are practices suited to supporting vulnerable customers.

Delivering on our side of the bargain

So, what measures are we taking, to support our partners to be Consumer Duty compliant when looking at claims and the customer support outcome?

Looking at Guardian’s claims support specifically, our whole approach to HALO – which is our bespoke claims support service – is based on our belief that a claim is about much more than just a payout. It’s about helping individuals with whatever they need when they’re going through incredibly difficult times and are possibly at their most vulnerable.

This perspective applies with or without the regulation, but we believe this approach helps us meet the Consumer Duty requirements.

HALO was designed to challenge the market norm because it is bespoke and personal, and our team are not confined to a set list of partners; they can listen to the claimant and provide what they need. In other words, we designed the service to provide suitably enhanced support when people are vulnerable.

When it comes to how our team deals with claims, our internal approach involves listening, using empathy, practising curiosity and avoiding judgement without sufficient knowledge, all of which are practices suited to supporting vulnerable customers.

Designed-in certainty and focus on outcomes

It is interesting, that a poor claims process for terminal illness is one of the few specific mentions of protection in the Consumer Duty guidance. However, we believe our work around clarity helps avoid this kind of poor practice. That includes clear definitions, which provide certainty at claim.

We also recognise there may be other vulnerabilities that are linked to claim, for example a vulnerability around how some people get paid and how they budget, and the disruption that a change in frequency from weekly to monthly income could bring.

As an example, with our Income Protection cover, we allow people the choice of being paid weekly or monthly, and let them choose when they receive the payment. This is designed to ease budgetary stress and allow them to align their payment to important outgoings like their rent or mortgage.

One interesting side point to mention, is that in the course of our review into how our claims support meets the Consumer Duty requirements, there was some discussion about whether we nominate an individual within the claims team as a ‘vulnerable customer champion’. While this – as a headline-grabbing approach – could seem like a good thing to do, upon discussion, we felt that everyone in the team is responsible for our claimants when they are vulnerable, and as such, everyone effectively plays that important role.

What now? Supporting our advice partners to meet the Duty

We’ve done a lot of work to document how our business is Consumer Duty compliant. We now want to continue our work with advisers to ensure Guardian and the firms who recommend us, can meet the duty in both letter and spirit to the benefit of our mutual customers, and we want to support advisers with what they need from us.

Our perception from working with advisers over the last five years, is that an increasing number are already paying much greater attention to the claims process, both in terms of claims being paid in a timely manner and around how the industry helps clients at times of such great stress.

The challenge now is to make sure that all advisers are mindful that every client has the potential to be classed as vulnerable if they need to claim. And that, for Consumer Duty purposes, advisers should be able to talk about how they are supporting these customers.

In this regard, we hope the Consumer Duty documentation on our website, our literature around Guardian’s claims support, as well as the contents of this article, provide some insight and a helpful framework to help advisers document how they support vulnerable claimants.

As always, we welcome feedback from our partners.