Contact breakage: risk factors and preventive measures.
Realizing that the customer relationship has broken down can sometimes take a long time, which can unfortunately have painful consequences for the manager. From experience, I’ve come to realize that the relationship we’ve built up with a customer can, however, provide clues: this is particularly true of customers with routine contacts who suddenly stop calling. Sadly, this is often due to sudden death or illness, which has prevented them from anticipating or managing the breakdown in the relationship (typical of strokes and degenerative diseases).In addition to these “classic” cases, loss of contact can also result from a variety of factors. It’s difficult to draw up an exhaustive list, but certain factors that can be identified according to the customer’s profile can lead to this situation. Here, we’ll look at four main situations that can quickly lead to a breakdown in the exchange with the customer:
I – The age-related break in contact
Elderly people, particularly those suffering from dementia or other cognitive disorders, can gradually lose the ability to manage their finances effectively. This loss of autonomy can lead to forgetting about the existence of certain bank accounts, financial investments or insurance policies, leading to their inactivity.
Social isolation is an aggravating factor. The absence of an attentive entourage – family, relatives or friends – capable of accompanying these people in managing their affairs increases the risk of a break in contact with the bank. In some cases, the person’s death may even go unnoticed. If the beneficiaries are unaware of the account’s existence, it may fall into escheat.
What’s more, the administrative procedures required to keep accounts up to date can become too complex for older people, especially those in a dependency situation. Simply renewing an identity document can represent an insurmountable obstacle, compromising any interaction with the bank.
For a more in-depth analysis of this issue, we invite you to consult our dedicated article: Age-related vulnerability as a risk factor in customer relationship breakdown.
When conflict breaks out on the spot, it becomes difficult, if not impossible, to investigate a customer’s whereabouts. Information is no longer accessible, and searches are dangerous, costly and unreliable.
This quick overview shows that, over the course of a relationship, age, profile, profession and place of residence are decisive factors in assessing the risk of contact breakdown in a customer relationship. Knowing how to take certain preventive measures in good time can therefore help mitigate this risk.
Preventive Financial Planning :
Mandate for future protection: Seniors can draw up a mandate for future protection, which appoints a trusted person to manage their affairs in the event of loss of capacity.Will and estate planning: Detailed, regularly updated estate planning can help ensure that heirs are aware of all assets.
Use of Guardianship Services :
Appointment of a tutor or curator to manage the financial affairs of a person who is no longer able to do so themselves.
Family and social support :
Involving loved ones: Family members or close friends can be involved in managing finances, by obtaining powers of attorney or ensuring that accounts are regularly monitored.
II – The break in contact linked to PEP status
During the course of a customer relationship, it may happen that an account holder, or someone close to him or her (spouse, partner, children, siblings, uncles, aunts, parents-in-law), gains access to a position considered sensitive. Because of their prominent position or influence, these people are more likely to be involved in acts of corruption. They therefore fall into the category of Politically Exposed Persons (PEP).
Today, more and more people from civil society are becoming PEPs. This phenomenon can be explained by the increasing openness of governments and public institutions to personalities from a variety of backgrounds (business, media, NGOs, etc.). These individuals, by virtue of their fame or influence, are subject to the same obligations of vigilance as traditional PEPs, such as members of government or diplomats. This development broadens the definition of PEP, increases the number of people concerned and increases the risks of non-compliance for banking establishments.
For banks, managing a relationship with a PEP means complying with enhanced due diligence obligations imposed by anti-money laundering and anti-corruption regulations. This means more thorough checks, particularly on the origin of funds and the nature of transactions. These requirements can make the banking relationship more complex and restrictive, particularly when the person concerned becomes less available or ceases to maintain regular contact with the bank.
Indeed, PEPs, because of their important public functions and responsibilities, often have very busy schedules. They are surrounded by numerous intermediaries, and are careful in managing their communications to limit the risks associated with their position. This can complicate matters for banks, particularly when they need to obtain supporting documents or information as part of their compliance obligations. Added to this is the difficulty of obtaining valid contact details, which are often protected or subject to frequent change. Even when contact details are available, establishing genuine contact remains a challenge in itself.
Preventive measures :
The customer profile must therefore be a factor of vigilance for the bank, which must establish clear communication channels and regular, predefined points of contact (recurrence/day/time) to monitor accounts and avoid losing contact.
III – Break in contact due to bankruptcy or legal proceedings :
Entrepreneurs, industrialists, managers, company directors, traders, financiers, investors, administrators, economic operators… all professions exposed to the risk of insolvency, bankruptcy or even ruin. In this type of situation, a bank can lose contact with a person who is bankrupt or even involved in legal proceedings. The customer may become difficult to contact for a variety of reasons:
– Change of address or contact details: A bankrupt person may change or even lose their residence (sometimes even in a hurry) and not inform the bank of their new contact details.
– Legal freezes: The assets of a person involved in legal proceedings may be frozen, limiting communication and access.
– Reduced interaction: The individual may voluntarily reduce his or her exchanges with the bank to avoid further investigations.
Preventive measures :
To manage this risk, the bank must remain proactive, seeking to maintain contact and monitor any legal proceedings or publications likely to affect its customer.
IV – Rupture linked to a geopolitical situation :
War, conflict and tension zones can have a significant impact on a bank’s relationship with its customers. Sadly, recent decades have provided us with concrete examples. In some countries, forced displacement or disrupted communications can make it difficult to reach customers. The absence of telephone networks and Internet connections makes it difficult to maintain contact.
Preventive measures :
Maintain several points of contact: Having the contact details of relatives in other countries (consider setting up a power of attorney) and/or the address of a “pied-à-terre” abroad, will enable you to keep in touch in the event of forced displacement.Adjust the frequency of monitoring: When a geopolitical situation becomes tense, intensify regular monitoring to quickly detect any change in the situation.Work with local partners: Collaborate with local offices or banks in less-affected regions to facilitate exchanges.
