An important role for credit unions is to offer financial services and empowerment to people who have been marginalised – but how do they protect these customers at the same time?
Delegates discussed the problem at the annual conference of the Association of British Credit Unions (Abcul) in Manchester last week, and heard examples of how they can respond to different cases from specialists at Lloyds Banking Group.
Martin King, head of customer vulnerability, and Jane Rodrick, senior vulnerability manager, shared the bank’s approach to supporting vulnerable customers. Mr King said it was difficult to guess whether some customers were vulnerable – and even more challenging to raise the issue with them.
Among the most vulnerable are people on low incomes; one third of those on benefits will be banking with Lloyds. Successfully supporting these groups means working with the government and charities in local area, said Mr King.
“Vulnerability is not an area of competition, is an area in which we collaborate,” added Ms Rodrick.
Lloyds focuses on three areas of vulnerability – financial abuse, critical illness and homelessness.
In terms of financial abuse, the bank acts by removing of a party from a joint account, protecting funds and supporting customers who have been duped and coerced. They can also be introduced to third party organisations who can support them further.
Lloyds also works with Tender, a London charity, to train HR staff to recognise when colleagues may be impacted by domestic abuse.
When it comes to critical illness, the bank aims to help customers with practical financial solutions to give them breathing space, the Abcul conference was told. Staff members are trained by Macmillan to provide specialist cancer support and can refer customers to the charity for help, and the bank runs a phone line to help customers with cancer cope with financial problems.
Mental health problems can also leave people financially vulnerable, hampering their ability to pay loans or manage finances.
To improve understanding of the various issues faced by their members, credit unions can use the guide published by the Money Advice Trust: Vulnerability: a guide for advice agencies – 12 steps for treating clients in vulnerable situations fairly.
Another challenge comes from GDPR, which can be restrictive when it comes to dealing with vulnerable customers, preventing disclosure.
Customers who are homeless or in temporary accommodation can also receive support from the bank’s staff, who work with charities around identification and verification requirements. Lloyds is running a pilot homelessness project at its flagship branch in Manchester – which has around 500 rough sleepers – in collaboration with Greater Manchester mayor, Andy Burnham. This will help those with no address or ID to open bank accounts and access benefit payments such as universal credit.
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Lloyds is also setting up bank accounts using a PO box address for people who cannot share their address, and has developed a range of 83 different identification tools that can be used when opening bank accounts. Those who do not have the most common forms of ID – such as passports and driving licences – can use letters from relevant charities, allowing refugees, homeless people and victims of domestic abuse to open accounts.
The bank has regular meetings with the Department of Work and Pensions, delegates heard, and trains its staff to identify vulnerable customers who then go on to train other staff members.
“Train your staff to spot signs and also raise it properly,” Mr King told delegates. “Understand what the issue means and how the products might need to be adapted to meet their needs. The key is to create an environment in which people feel safe to share what it means.”
Gambling is another problem for vulnerable customers – who often connect their bank accounts to Paypal for gambling, which means banks and credit unions will not be able to always spot these. Lloyds and other big banks are developing plans to help customers restrict their spending on gambling.
The bank is also working to prevent people being threatened or coerced into withdrawing money, and asks customers to answer 10 questions when they seek to withdraw above a certain amount of money, be it in branch and online. If they still suspect customers of being at risk they contact the police for support.
“It’s about having the right script and support and training at the right time,” said Mr King.
