We've outlined signs of a vulnerable customer.
The FCA defines a vulnerable customer 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.”
They're also clear that dealing appropriately with a potentially vulnerable customer goes beyond the parameters of Treating Customers Fairly, as they may need additional assistance in order to make informed decisions.
As we age, vulnerability increases and recent research by the FCA identified that 60% of UK adults aged 65+ show some characteristics of vulnerability, and 31% of those aged 85+ have low confidence in managing their money, however never assume older customers don’t understand, it's surprising how many of our customers do extensive research before they meet with their adviser
But it's not just ageing that can undermine understanding potentially complex financial products; there are a number of other situations which may impact individuals in an adverse way and impair judgement and decision making and advisers need to be in tune with the signals.
For example, individuals dealing with:
This demonstrates the issue of dealing with vulnerable customers is complex and it's vital to remember that there is no template and no one size fits all, especially not in later life. Flexibility to accommodate customers should be key not ‘nice to have’, and something that is often overlooked is that that customers will have changing expectations over time; thus the expectations of a 75 year old today will be very different over a 10-20 year time horizon.
Lastly don’t let age drive your treatment of customers in later life – there are many variables that drive customer profiles such as healthy cognitive decline, unhealthy cognitive decline, impairments, critical life events etc, so don’t second guess any suspected issues.
It's important to embed good practices into your advice process, which demonstrate a pro-active approach, and we've outlined some ideas below that might be helpful:
The FCA have a strong focus on this issue and have published a number of papers on the subject in recent years, with further guidance for Independent Financial Advisers expected in the near future. You can read their Financial Lives report View - here.
If you need any further help please call us on 03330 048444.
This website is designed to give professional financial advisers information and tools that they can use to help control and develop their business and should not be relied upon by private investors or any other persons.