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Firms need to get their vulnerable customer policies in order

First published by Best Advice


Years ago, the notion and determination of who might be a ‘vulnerable customer’ would have been a lot narrower than it is today. Back then, vulnerability was often deemed to be just down to a factor of old age or obvious disability, rather than the much broader view we take today.

And that is absolutely right, and seems perhaps even more relevant, given the environment we have all lived through over the past 12 months, and the uncertainty many of us will have clearly had to deal with both recently and perhaps in the years to come.

Of course, vulnerable customers are not just a product of the pandemic, and it’s therefore imperative that advisers are fully up to speed with how they identify potentially vulnerable customers, how they work with them, the support they provide and the outcomes they deliver.

Protecting vulnerable customers

Quite rightly, protection of vulnerable customers has moved much higher up the regulatory agenda in recent years, and it is a priority for the FCA. It is concerned that regulatory firms, not acting with due care and attention, can produce detrimental outcomes for customers which have a more severe, negative impact because of a customer’s vulnerability.

Indeed, the FCA’s definition of a vulnerable customer sums this up quite neatly: ‘Someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.’

To that end, in February, the FCA issued updated guidance for advisory firms entitled, ‘Guidance for firms on the fair treatment of vulnerable customers’, and it goes without saying that this should be your first port of call.

As a network however it’s not simply good enough to point our AR firms in the direction of the guidance and ask them to ‘get on with it’. Instead, it’s up to us as the Principal to put in place a consistent policy and approach, and to have processes, training and policies which protect the customer and ensure our advisers know exactly what they need to look out for, and having identified a vulnerable customer, what is the appropriate course of action to follow.

Which, of course, is not as simple as it sounds because many customers will not consider themselves as ‘vulnerable’ at all, and there is no set period when that vulnerability might start and/or end. There is also no exhaustive list of vulnerable customer types, neither is there one set process which advisers should follow to identify them.

At the same time, there are several ways in which advisers can go wrong. One thing you are likely to have learnt over time is that any ‘formal assessment’ of vulnerability where the customer is aware it’s taking place, is not likely to go down well with them.

It’s here where soft skills are vitally important. Where an adviser goes through a specific process, asking the right questions, probing a little further if necessary, but the client concerned is not explicitly aware this is taking place. This is no easy challenge for the adviser/firm but it’s vital we get this right, otherwise we risk customers not being identified correctly, and from there they fail to get the right level of support and outcome.

The Stonebridge approach

The Stonebridge policy in this area looks at some common indicators including noting changes in circumstances of existing customers, verbal indications from customers, for example, if they say they’re unable to use the stairs; then there are communication difficulties which can be observed over the phone or spotted in an e-mail, physical indications like a shortness of breath, or signs that a customer may have difficulty in understanding the adviser.

Understanding these aspects may point you in the right direction and from there you can determine what level of support is required to help that client. We shouldn’t forget as well that dealing with a financial services firm can be challenging for many people on many levels – it doesn’t necessarily mean they see themselves as vulnerable, but if the adviser does reach that conclusion, it should mean you can put in place the right steps to make that interaction more comfortable and less stressful.


Overall, having a policy in place and a structure in terms of the service you can provide to different types of customers, is only going to be useful and beneficial for both you and them. Vulnerable customers have just as much right to financial services provision and advice as anyone else – you might argue it’s more important they have access to this – and it’s therefore important that our industry gets this right.

There’s no doubting this is going to remain high on the regulator’s agenda, but firms should also want to get this right themselves, as a good business practice. It’s up to our sector to ensure that’s what we are delivering.

Rob Clifford is Chief Executive of Stonebridge

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