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53% of UK adults are vulnerable....

UK Payment Service Providers (PSP's aka Banks and e-Money firms) have created the capability for consumers to send their life savings instantly to someone they've never met from the comfort of their own home.....something that was not possible just a few years ago. The erosion of the branch banking network and the emergence of faceless fintech banks has accelerated the 'remoteness’ of banking.


The following statistics, from sources cited by the Financial Conduct Authority, make interesting reading for PSP’s:


  • 53% of UK adults have characteristics of vulnerability(1).

  • People with the characteristics of vulnerability are 12 times more likely to fall for a scam approach than those who have no such characteristics(2)

  • 1 in 7 adults have the literacy skills at or below the level of 9- to 11-year-old(3)

  • An option presented as a default choice can also be seen as an implicit recommendation(4)*

*for example, a large green “PAY” button presented on screen at the end of a payment journey?


Against this backdrop, is it any surprise that some consumers commit to making a payment before they’ve really had time to think?


In its forthcoming CRM changes the PSR is considering what "a reasonable standard of consumer care" looks like. This is a tricky area, particularly if a human-centred design approach is used to explore the topic.


Put a bunch of consumers in a room (to do a human-centred design session) and ask their opinions about payment scam warnings and it will reveal some interesting attitudes; "I don't need all these scam warnings when I am making a payment".... "scam victims are idiots, I'd never fall for a scam".... are comments often heard and regularly echoed in the comments section after the latest online scam story.


However, research has shown that most consumers are over-confident when it comes to assessing their own ability to spot a scam. A global survey of 6,000 people by VISA(5) found that consumers who describe themselves as very knowledgeable or extremely knowledgeable in recognising scams are more likely than others to respond to scammers messages. Furthermore, more than 4 in 5 (81%) respondents to the VISA survey checked the wrong details to determine the authenticity of a communication. There is a risk that this consumer over-confidence also extends to defining the level of care a “normal person” would take when, for example, investing money or receiving an unsolicited call from their bank. Let's hope the PSR isn't too over-confident in the average person's scam spotting abilities when they attempt to define consumer negligence.


The reality is that those in the midst of a scam do not have the 20:20 foresight vision of a consumer who's volunteered to be in a payment journey human-centred design session. Every scam victim is painfully aware of the benefit of hindsight too. I'd hazard a guess that most people, when asked, would claim they'd never fall for a scam and therefore don't need these "pointless bank fraud warnings..it's my money and I should be able to do what I want with it".


I wouldn't be surprised if the bar for what constitutes a reasonable standard of consumer care is set very low indeed.

1 FCA Financial Lives 2020 survey

2 FCA Financial lives 2020 survey...susceptibility to covid scams

3 FCA FG 21/1 Guidance for firms on the fair treatment of vulnerable customers

4 Ideas and results from the Financial Capability Lab. Money Advice Service, The Behavioural Insights Team, IPSOS MORI



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