Complaints and vulnerable customers - making schemes sensitive to member needs

Why? Because the true measure of good service is how you deal with the challenges.

Anyone can surf the waves of easy times and easy tasks, but being sensitive to difficulty and vulnerability is where brands, loyalty, mutual understanding, and longevity are built. Such sensitivity is a key to adding value, and it’s also central to the fair value for members that FCA Product Oversight and Governance (POG) regulations demand.

The fundamental difference between scheme-based insurance and off-the-shelf cover is that the former is specialist. Specialism comes with a unique set of member expectations. An emphasis on bespoke wordings, risk recognition and sensitivity, plus data-driven sector and demographic understanding, are just some of the characteristics that members look for. Schemes brokers should be delivering against these skills as a matter of course.

In books where you can expect to have many schemes and hundreds of members or more, there will always be complaints. In my experience, they typically span areas like delays, coverage issues, wordings, weird exclusions, over-stringent conditions, and claims performance. They also range from minor grumbles to ones that make their way to the Financial Ombudsman. Complaints are a good thing because they are a gateway to improvement. What’s important is how you recognise them and then how you deal with them. We all know the reality that a well-handled complaint is valuable to the member and can make all the difference to the broker come renewal time.

Make sure you have an ongoing complaints review process in place because it will help you ensure that your schemes' products are both fit for purpose and fair. Build the right metrics for common points of failure: these could be things like delays in communication or availability of cover, inaccurate documentation, plus a claim type not covered, or perhaps not explained clearly.

Check your wording too, as these can often be a complaint hotspot that you can defuse through ongoing review. Are they accurate and tailored to each scheme correctly? Keep policy documentation and covers as extensive as they need to be, but as short as possible. Aim to include only covers that are relevant to the risks involved for each given scheme.

There are vulnerable customers in all walks of commerce, but what constitutes vulnerability in relation to insurance schemes? The answer often lies in having a firm grasp of member demographics. A good example is property-related schemes where member age can create vulnerability issues. For instance, is your documentation accessible to the sight or hearing-impaired and screen-reader friendly? Is it written in plain English that’s easy to grasp? Good accessibility also includes being easy to contact. Do you have multiple, well-promoted communications channels that enable members to reach you their way, when they want?

Brokers are the front-end of the scheme's relationship, and delegated authority means you can effectively perform as the underwriter too. If you’re unsure about vulnerable members within your schemes (and there are bound to be some), then map your membership. Check the demographics, check the complaints, and look for the giveaway signs that some members might be struggling. Again, this ties back to the fair value element of POG. There’s always a risk of brand or reputational damage if vulnerable members slip through the net, and that can create question marks around the duty of care.

The FCA is very much on the front foot with POG and fair value. There’s nothing wrong with being cautious and taking extra care to ensure complaints are caught early. Missing them or failing to deal with them quickly and effectively can lead to bigger problems downstream. Indeed, we want to know about them because together, we can apply fixes and help develop the processes that look after your members.

Analyse, double-check, document, act, and monitor. Well-thought-out review and audit processes will enable you to address complaints promptly and anticipate the needs of vulnerable members before those vulnerabilities become issues - for the member, for you, or for both. It’s an obvious point, but one worth repeating: when you work with your scheme members and solve their complaints because you understand their needs, they’ll respect you for it. What’s more, they’ll stick with you at renewal time.