It appears that every day there is another headline about either mental health issues or families dealing with a vulnerable loved one, so it is crucial that we keep the subject of how to help vulnerable clients high on our agenda.
By Sarah Hendy Strategic Partnerships Manager
The Financial Conduct Authority (FCA) defines a vulnerable consumer as: ‘Someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.’* The FCA has outlined that this can cover many scenarios beyond those who are struggling due to age or mental illness, including:
- Low literacy, numeracy and financial capability skills
- Physical disability; severe or long-term illness
- Low income and/or debt; being young and inexperienced
- Changes in circumstances such as job loss, bereavement, or divorce
- Reduced English language skills
Some key indicators to look for when identifying a potentially vulnerable customer could be:
- Repeated questions of a similar nature
- Lack of understanding
- Inconsistent remarks or responses
- Body language signs
So, what should firms be doing to ensure that they are identifying and protecting vulnerable clients?
The good news is that the FCA’s mission paper, Our Future Approach to Consumers, clearly sets out its expectations around inclusivity, from understanding needs to assessing potential risks. Following FCA guidelines can ensure that firms pay attention to possible indicators and identify those who could be at risk of financial exploitation.
Some of the easiest steps to ensure you are well equipped to support vulnerable clients could be:
- Ensuring all staff, particularly those on the frontline, are aware of the matter and that they can identify the key indicators.
- Producing documentation that’s clear and easy to understand.
- Providing additional opportunities for the customer to ask questions
- Obtaining additional confirmation that the customer has understood everything.
- Offering them the opportunity to have a trusted person, such as a friend or family member, present during any interactions.
- Offering the customer additional time before they complete any transactions.
Ensuring you are up to speed on this topic can also help you to develop your professional connections. For example, this could apply if you work closely with law firms that are working with vulnerable clients.
This is an area that we at Blackfinch are passionate about and are helping many advice firms with. As part of the support we provide, alongside products that mitigate risks such as our range of Inheritance Tax solutions, we offer specific presentations on how best advisers can serve vulnerable clients when advising on estate planning requirements.
*Source: Occasional Paper No 8