By Clare Bolingford, Director of Banking and Insurance at Financial Markets Authority
Without stating the obvious, it’s clear that many New Zealanders are doing it tough as a result of the Covid-19 lockdown.
Rising unemployment and struggling businesses means that some New Zealanders will be considered “financially vulnerable” for perhaps the first time in their lives.
The UK financial regulator – where I used to work – defines vulnerable consumers as "… someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.”
In other words, it’s not a “type” of person who is financially vulnerable. Rather, their vulnerability can result from an event or set of circumstances – like losing your job in the Covid-19 lockdown.
Now, more than ever, it’s vital that the finance industry has clear systems and processes in place to identify and support potentially vulnerable customers. While my role is focussed on the banking and insurance sectors, this applies equally to all firms.
The first step is understanding what might cause a customer to be financially vulnerable, and what are the warning signs of this? Firms should make sure their staff are well trained, and empowered, to offer support to vulnerable customers.
As the conduct regulator for the finance industry, the FMA has seen some great examples of financial services providers taking steps to help vulnerable customers.
We’re going to need more of this as more of us face financial challenges because of circumstances beyond our control.
A bit of kindness through the tough times will inevitably mean a lot of goodwill when those customers are back on their feet again.
You can read our guidance for financial providers on customer vulnerability here.