Article by Steve Sullivan
Head of Regulatory Compliance
Contact Centre Panel
First, some history...a few weeks ago, the Information Commissioner’s Office (ICO) announced a series of related fines on firms using illegal telemarketing tactics.
Five firms in the appliance warranty insurance sector were fined a total of £405,000.
And at least one of them appears to have already gone out of business.
The primary reason for these firms being fined was that they were calling prospects who they didn’t have a prior relationship with, whose numbers were registered with the Telephone Preference Service (TPS). This, as most of us should well know, is illegal. As covered in our previous articles – ICO flurry of fines and BTB sales and marketing ops compliance.
However, when the ICO levies a whole series of fines on firms in the same sector, with similar sales and marketing models, it’s evidence of other underlying concerns. Although the ICO’s Enforcement Notices only refer to 67 consumer complaints, these kinds of collective enforcement actions are invariably evidence of alarm bells ringing at the ICI’s Wilmslow offices about widespread misbehaviour. Here, the ICO has highlighted these firms’ targeting of vulnerable consumers, in this case the elderly.
Targeting the vulnerable elderly
Undoubtedly, judging by the evidence presented by the ICO, this is exactly what these businesses did. While it’s arguably unfair to judge a firm’s sales and marketing practises based on relatively little information, I think we can be confident that these firms were all at the malicious end of the ‘Ignorant vs Complicit’ spectrum of compliance awareness. They seem to have known exactly what they were doing, which is to deliberately target the vulnerable; selling on the basis of worry and fear, not value and consumer benefit, to those least well equipped to make informed decisions.
Scammers stick together
In an interesting example of geographical clustering, 4 out of 5 of the firms were located in East Sussex on the South coast, presumably showing connections to the biggest name in appliance warranty insurance, Domestic & General in Brighton (about which there is no evidence of the ICO having concerns, I hasten to add). So, even scammers like to stick together!
The vast majority of firms don’t set out to exploit or deceive, but
- Being a legitimate, respectable firm – even a blue-chip brand – is no guarantee you won’t be snared by the ICO, as the Royal Mail, American Express and Saga, which have all recently been hit by enforcement actions and fines, can attest
- Awareness of the prevalence and importance of vulnerabilities has grown. An understanding of vulnerability had increased before Covid 19, but the pandemic has accelerated it massively. Firms need to be able to both recognise and adapt to prospects and customers who are exhibiting signs of vulnerability
So, what can we learn from this raft of ICO fines? Does the rise of vulnerability awareness just mean that we can no longer sell to older people?
We sought the opinions of some members of the wider Contact Centre Panel network.
Are older consumers too ‘risky’ to market to?
Senior Response is a long-established outsourced contact centre “dedicated to communicating with the older consumer market”. So, what conclusions does Managing Director Michael King draw from the ICO’s slew of fines? Can firms still confidently market and sell to Mature consumers?
“We find that firms which utilise direct mail or online activity prior to commencing telemarketing activity not only have better results but give the customer and prospect the opportunity to know a little bit more about the business and ultimately be more receptive to being contacted.
We work very closely with our clients to ensure that we have a shared Vulnerable Customer policy, which outlines the process if we believe we have a vulnerable customer and what steps to take.
The other point I would stress is that firms should be aware that the adult children or grandchildren of many mature consumers are often part of the decision-making process and therefore your customer journey from marketing to sales, should incorporate this. We often arrange call-backs with our client’s customers to speak with the family member where permission is granted by the customer and requested by the family member. We all want to ensure our parents and elderly relatives are not being taken advantage of by the very things that the ICO have acted on. It is our view that firms who are proactive in the examples I have mentioned, are more successful in marketing to this rapidly growing market.”
What really is vulnerability?
“Circumstances impact people in different ways – what makes one person vulnerable may affect another quite differently. Age, mental and physical health and financial pressures are all subjective. We believe it is important to communicate with people in the most tailored way possible according to their circumstances and use the tools available to determine what is appropriate.”
Helen Lord, CEO, Vulnerability Registration Service
You can find out more about the Vulnerability Registration Service by clicking here
How can technology help?
Can the new technologies of machine learning and artificial intelligence play a part in helping firms identify vulnerable prospects and customers – and serve them better, too?
Keith Shanks of Vorth Technology Solutions helps make contact centres work more effectively through the application of AI (artificial intelligence) tools. Can they support centres involved in sales and marketing, especially when they are targeting groups which may contain vulnerable consumers?
“Advances in AI and Machine Learning (ML) now mean that all contact centres are able to highlight potentially vulnerable customers. As has already been highlighted, vulnerability comes in many different forms and it is the responsibility of companies to understand these and act appropriately.
The truth is there is insufficient attention given to vulnerability and if you consider the current economic climate, responsible companies should be paying more attention to the welfare of their customers and the right technology will have a huge impact on this.
We expect a mini-revolution in this field over the next few years as regulators also start using technologies to review and monitor call centre services.”
Financial services: What’s the FCA’s perspective?
Elanev provides dynamic scoring services to contact centres including propensity and best time for contact, propensity for purchase and propensity for financial resilience / vulnerability with no GDPR implication. Elanev’s John Willoughby gives his practical guidance for the future of such financial product sales and marketing, in light of proposed regulatory changes:
“Financial product sales will be bound by the FCA’s proposed Consumer Duty requiring marketing firms to “deliver good outcomes for retail clients”. The FCA expects all reasonable steps to be taken to avoid causing foreseeable harm to customers. Harm being primarily financial, but may also include mental health effects.
The FCA is requiring firms to have a better understanding of their customers calling out the need to understand customer propensity for vulnerability and to harm. The FCA expects firms to predict behaviour and monitor outcomes recognising the need for data to support this. Common data sources include:
- Own customer data: Can provide a highly granular view of financial vulnerability. But limited if the provider is not the main account holder or does not currently service the customer.
- Financial vulnerability propensity score: Applicable to all customers across the whole UK. Uses outcome data with no personal identifiable details shared to give a daily propensity for financial vulnerability score with no GDPR implication. Cheapest solution available.
- Bureau data: Provides a ~1month lagged measure of financial credit stress which only applies to credit active customers. Lacks information on income, savings, equity or assets, mortgage or rental payments and other commitments limiting it applicability to assessing vulnerability.
- Self-certified data hubs: Customers can self-declare vulnerability. Such hubs rely on customer accuracy and honesty as submissions are not audited. Customers are also unlikely to update submission as their situation changes limiting relevance. Limited coverage doesn’t lend itself to marketing campaigns.
- Open-Banking: Requires individual customer consent. Can lack information on savings, assets and equity. Higher cost limits application in large marketing campaigns.
To properly identify, quantify and assess vulnerability a combination of data sources may be needed. The specific combination depending on the depth of customer insight that the organisation has and the level of customer consent granted.”
So where does this leave us?
Helen Lord of the Vulnerability Registration Service makes clear that vulnerability isn’t simple or clear cut. The scammers recently fined by the ICO deliberately targeted older people, but not all older people are vulnerable. So, we all need to be more vulnerability aware and unavoidably some customer and prospect groups are likely to contain a higher proportion of people with vulnerabilities. Senior Response is dedicated to engaging and communicating with older people, but as Michael King explains, they do so in a sophisticated way. Senior Response and its clients make use of multiple contact channels and embrace more varied and flexible customer journeys. This might point the way for other sales organisations – and not just for those targeting the ‘grey market’.
A growing role for technology and the insights it can provide seems to be unavoidable and desirable. Vorth Technology Solutions’ Keith Shanks has explained how technologies like his can help identify the ‘growing’ number of vulnerable consumers. John Willoughby from Elanev shows that in the regulated financial services sector, especially, the smarter use of data across a combination of sources is now essential.
The ICO’s fines of exploitative scam marketers doesn’t mean that older consumers are now ‘off limits’ for responsible, ethical firms. But the fines do help highlight the growing importance of being able to recognise and respond to consumer vulnerabilities; not just as an ‘add on’ but in a way that is embedded into processes and customer journeys.
If you require guidance on any of the areas discussed in this article, please contact us by filling in the form below and referencing the subject.