Protecting Vulnerable Customers: Ethical Challenges and Solutions
Economic abuse is a pervasive yet often hidden form of control, affecting thousands—particularly in times of financial distress. Financial institutions play a crucial role in safeguarding vulnerable customers, but navigating the ethical and operational complexities of protection is a significant challenge.
One emerging issue is the misuse of payment reference fields, where abusers send threatening, manipulative, or distressing messages under the guise of routine transactions. Some even exploit the system by using multiple small payments to construct longer, coded messages, making detection more difficult. Left unchecked, these tactics can deepen a victim’s distress and erode trust in financial systems.
The Ethical Dilemmas of Customer Protection
Protecting victims from economic abuse presents key ethical challenges:
- Balancing Privacy with Protection – Should banks proactively monitor for abuse, or rely on victims to report incidents? Overreach could erode customer trust, while inaction leaves victims vulnerable.
- Interpreting Intent – Differentiating harmful messages from benign ones is complex. Without context, even seemingly innocent phrases can carry hidden threats.
- Managing Account Closures – Shutting down an abuser’s account may inadvertently cut off critical financial support for victims, such as child maintenance payments.
- Regulatory Constraints – Basic Bank Accounts, designed to ensure financial inclusion, present legal hurdles to closing accounts even in cases of documented abuse. UK Finance has proposed regulatory changes to address this gap, ensuring financial institutions can act decisively.
Solutions: Lessons from Industry Leaders
UK Finance’s From Control to Financial Freedom report outlines key strategies to combat economic abuse, including:
- Blocking Abusive Payment References – Empowering victims to filter or hide harmful messages.
- AI-Powered Detection – Using machine learning and natural language processing (NLP) to identify patterns of abuse, even in coded or subtle language.
- Cross-Sector Collaboration – Partnering with domestic abuse charities to enhance banks’ understanding and response strategies.
Internationally, the Commonwealth Bank of Australia (CBA) has set a precedent with its Next Chapter initiative, incorporating customer education, staff training, and proactive intervention tools to deter financial abuse.
The Role of AI in Detecting Abuse
AI-driven detection systems provide a crucial line of defence:
- Pattern Recognition – Identifying repeated small-value transactions with hostile or coded language.
- NLP for Hidden Messages – Detecting abuse disguised through creative formatting or numerical substitutions.
- Adaptive Learning – Evolving in response to new forms of abuse as perpetrators refine their tactics.
However, AI deployment must be carefully managed to address ethical concerns around privacy, bias, and transparency. Financial institutions must ensure these systems operate fairly and responsibly.
A Practical Approach to Safeguarding Customers
To effectively combat economic abuse, financial institutions should:
✅ Enable Victims to Regain Control – Offer options to block or filter messages from abusers.
✅ Equip Staff with Specialist Training – Ensure frontline teams can identify and support affected customers sensitively.
✅ Advocate for Legislative Change – Push for reforms that allow intervention in cases of documented abuse.
✅ Foster Cross-Sector Collaboration – Work alongside charities, regulators, and technology providers to develop holistic solutions.
How MBC can help
At MBC, we partner with financial institutions to implement tailored, ethical solutions for tackling economic abuse. Recently, we helped a major UK bank introduce payment reference blocking, ensuring compliance while enabling cross-functional collaboration. Our expertise bridges the gap between regulatory obligations and practical implementation.
We don’t just advise—we build frameworks that drive long-term change, ensuring banks can protect vulnerable customers while maintaining ethical integrity.
Conclusion
Economic abuse demands urgent attention and innovative responses. By learning from industry leaders, leveraging AI responsibly, and adopting a customer-centric approach, financial institutions can make a tangible difference.
Partnering with MBC ensures a strategic, effective response—empowering financial institutions to protect their customers while upholding the highest ethical standards.