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News for Members

18 April 2016

Vulnerable Customers - Best Practice in Use of Flags on Accounts (MALG)

The CCA would like to make those members who submit data to a credit reference agency aware of a paper which has been released by MALG (Money Advice Liaison Group) entitled:

'BEST PRACTICE IN THE USE OF 'FLAGS' TO BE PLACED ON THE ACCOUNTS/CASE FILES OF INDIVIDUALS IN VULNERABLE CIRCUMSTANCES WHO ARE UNABLE TO MANAGE MONEY'

Since computerisation, companies within the consumer credit sector have used internal 'flags' to categorise and distinguish different types of individuals, including states of vulnerability.  These flags then enable the company to take certain actions on the accounts marked.  This situation has become problematic, with each company having adopted its own flags, with their own names and often meaning completely different things to different companies.

The new paper from MALG (produced with the support of the ICO and FCA) aims to address any potential lack of transparency and fairness in the use of sensitive flags when it comes to attempting to identify health issues (or wider forms of vulnerability).  It recommends that a more consistent and simple approach to using flags should be adopted, which is fairer to the individual, encourages better engagement and fuller notes and avoids the placing of the individual into a 'box' which in many cases may not be appropriate.   

The paper suggests that three flags should be used to cover all vulnerability cases where the vulnerability affects the individual's ability to manage money or deal with their debts.  The flags are:

  • VULNERABLE
  • VULNERABLE (MH)
  • VULNERABLE (NEC)

 

The (MH) denotes that mental health conditions exist. The (NEC) flag is recommended where a vulnerable issue has been identified but the individual has either declined to give their explicit consent to hold this information but the flag is being used to aid the management of the customer's account, or where explicit consent is being sought but has not yet been obtained.

It is intended that these flags will stop 'tick boxing' and will help better conversations and engagement to be initiated with the individual.  This approach also removes the necessity to qualify the vulnerability as mild/severe/short term/long term etc. as improved communication with the individual will enable the length in time of the vulnerability to be identified.

For more information, including examples and how the new flags may be used, reviewed and removed, download the MALG paper at the link below:

Download MALG Document: Best practice in the use of 'flags' to be placed on the accounts/case files of individuals in vulnerable circumstances who are unable to manage money

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