Vulnerability: now this is a tricky subject. Is a customer vulnerable? It’s a pretty simple question, with a not so simple answer. There are many layers to vulnerability, and therefore it can be difficult to identify at what point we could categorise a client as vulnerable.
We usually think of vulnerability in the sense of bereavement, loss of job, mental health, but what about other issues? What about financial problems (debt), family illnesses (e.g cancer), low numeracy and literacy skills, relationship breakdown, hearing or visual impairments – and other issues that may not even be permanent. For example, the impact of a job loss isn’t permanent and neither is the stress of debt. For some of these scenarios we often forget to consider the mental impact they can have on us as humans and how it may impact the decisions we make.
In this industry, it is important for us to be aware of the signs of vulnerability and act accordingly. The FCA’s Consultation Paper 19/03, which looked at guidance for firms on the fair treatment of vulnerable customers, identified that the industry as a whole struggle to identify vulnerable customers and how to help them. The paper also stated that a whopping 25.6 million people in the UK could potentially be classed as vulnerable!
Unfortunately, as not every case of client vulnerability is the same, there are no exact steps to take with a client. With that in mind, I have put together some helpful do’s and don’ts when it comes to dealing with vulnerable customers:
- Assume just because you can’t see it, that vulnerability isn’t present. Someone can tell you they are vulnerable by how they communicate. For example. can they understand what your advice is and have a discussion around it? Do they act they uncomfortable? Fidgety? This could be a sign of stress or anxiety. Are they not open with you? Do they not want to talk about certain issues?
- Call customers vulnerable. This could upset or even offend people. They know you will be trying to help but people don’t like to think they are vulnerable.
- Apply a ‘one size fits all’ approach. This won’t work. Someone who has suffered a bereavement compared to someone who may have low numeracy and literacy skills may need a different approach from you in helping to understand the advice.
- Lose your patience. It may take time for the client to understand the advice and you may have to have extra meetings, be in touch more with the client, answer more questions than normal. The impact that advice can have on the client is massive, so it’s important you make sure they understand it.
- Have contacts for third-parties. It is always good to have a third party that you can rely on to help you in this situation. This can be someone within the firm who is not a party to the advice being given or even maybe a solicitor. Always having another pair of eyes and ears can help to pick up on points you may have missed.
- Think of alternative ways you can provide advice. Would the client feel more comfortable at their home? Have you thought about a graphic approach to report writing for those who struggle to understand?
- Take time to understand the client. Listening to their circumstances and asking more about them will help to bring out any signs of vulnerability present. This will also help to demonstrate Treating Customers Fairly (TCF).
- Take up extra training. This may help you to identify flaws in your internal procedures while contributing towards your Continuous Professional Development (CPD).
- Ask for help. If you are not sure if the process you have in place is correct, ask for a second option. I’m sure your compliance providers will be more than happy to double-check this for you.
We think this will be a big area of focus for the FCA in 2020, so certainly worth some further thought now on how you identify and deal with this in your firm. If you have any queries about vulnerability and would like more guidance on what to do in this situation, you can contact email@example.com, or catch up on our recent TALK: Vulnerable Customers webinar.
Hannah Scott – Junior Compliance Support