Launched in 2019, the Vulnerability Registration Service (VRS) gives vulnerable individuals a single place to register their status, preventing them having to repeat the same difficult and complicated conversations about their finances when engaging with creditors.

Following on from Debt Awareness Week, we’re looking at some of the ways technology can facilitate more positive outcomes for vulnerable consumers, helping to ensure compliance for businesses, as well as streamlining what can be a complex and difficult to understand process.

The COVID-19 pandemic

The COVID-19 pandemic has placed immense pressure on the nation’s finances.

According to research by The Money Charity, the UK went into the first lockdown with £1.45 trillion in mortgage debt, up from £500 billion in 2000.

For every adult in the UK there is an average of £4,264 in unsecured debt with the UK holding £72 billion in credit card debt alone, a significant proportion of which is deemed “persistent” by The FCA and in need of sustained reduction.

While many have fallen back to rely on savings throughout the pandemic, 12.8 million households had no savings at all or less than £1,500 in March, 2020, meaning a sudden loss or reduction in income would push them into financial difficulty.

But how has the industry responded to ensure the most vulnerable are adequately supported?

The Vulnerability Registration Service  

Year on year, the VRS has grown in popularity as awareness increased among creditors and service providers and conversations around how the industry can better support vulnerable consumers became a priority.

Financial vulnerability can be characterised by a range of emotional and practical consequences making people overwhelmed which can impact their perspective, lead to poor decision-making and prevent their ability to plan ahead. These issues can all play a role in how successfully consumers are able to manage their finances.

The VRS keeps track of consenting, vulnerable consumers details – ensuring lending and credit applications are always reviewed sufficiency, with the full picture in mind. Individuals can opt to be pre-declined for financial service applications, for example, or for a ‘referral flag’ to be added to make organisations aware of their circumstances. Vulnerable consumers can share their wishes with users of the register, for a period of time of their choice, minimising the chance of poor financial decision making.

Of course, the VRS does not replace any ethical or statutory obligations for commercial organisations to identify and make adjustments for vulnerable people – however it can help consumers better navigate their personal finances, acting as a ‘decision agnostic’ platform for both the consumer and lender.

The role of technology in supporting vulnerable consumers

Previously, tracking consumers deemed as vulnerable was difficult, with paper-based, manual procedures often prone to human error, a lack of uniformity or unintentional oversights.

Many businesses have invested in systems able to help deal with vulnerable consumers, but without the VRS they lack the full picture, potentially missing key information. They also rely on the consumer repeating the same difficult conversation, multiple times – potentially missing out important information about their circumstances, income and expenditure.

Technology is playing an important role in supporting vulnerable consumers, and is able to provide an accurate picture of a person’s financial situation, within just a few minutes.

With vast sections of the population facing another financially challenging year, it’s important creditors put measures and safeguards in place to support consumers – especially those deemed as vulnerable. And while it’s understandable that some may be reluctant to discuss their finances, it’s better for all concerned if creditors and lenders can access all the facts.