We take the issue of customer vulnerability very seriously and have done so for many years. In an illuminating and timely report, the Lending Standards Board (LSB) and the Money Advice Trust recently looked at the impact of vulnerable circumstances on people who run small businesses.
The report was significant in assessing how banks can support small business customers who find themselves in difficult financial waters. The report draws on insight gathered from LSB registered firms, as well as interviews with money advisers and clients of Business Debtline, the UK’s only dedicated free debt advice service for small business owners. Significantly, the research found that there is often a direct link between a business’s financial difficulties and the person running the business experiencing some form of vulnerable circumstance, such as a mental health problem or serious illness. Other key findings included:
- A vulnerable situation is never black and white, and businesses are by their very nature volatile. Not every trigger will equate to a small business customer suffering harm and so every customer needs to be treated on a case by case basis.
- The causes of a vulnerable situation can be multiple and complex and may not always derive from personal circumstance alone but from a number of sources, including the business itself.
- One of the challenges with small businesses is identifying vulnerability early, particularly where the relationship is at arms-length, or customer interactions are limited.
It is important to note that the Financial Conduct Authority (FCA) is also interested in this topic and remains committed to broadening firms’ understanding around vulnerability and providing regulated entities with practical help and resources in developing and implementing a vulnerability strategy.
At Hampshire Trust Bank we have policies in place that look to support vulnerable customers and it remains high on our agenda. With SMEs representing the back bone of our economy, it is important that policies are in place to support them when times are difficult.
Over the coming weeks and months we will be looking into this matter further, working with colleagues across the business and with other stakeholders on how we can develop further our approach to vulnerable customers.
Jenny Davies is Director of Compliance