Ask the experts: Vulnerable customers

Karl Steadman, retirement and later life specialist at Just Group, discusses key takeaways from the FCA’s finalised Guidance for firms on the fair treatment of vulnerable customers


The Guidance is based on the FCA’s Principles for Businesses. Can you tell us a bit about the Principles and how they apply to vulnerable customers?

The key Principles include customers’ interests (Principle 6), which expects firms to “pay due regard to the interests of its customers and treat them fairly”. For example, if a firm is dealing with a client’s Power of Attorney, the firm needs to ensure it is considering its client’s interests, not the Power of Attorney’s.

The Principles also look at communications with clients (Principle 7), expecting firms to ensure they communicate with clients in a way which is “fair, clear and not misleading”. Finally, they highlight conflicts of interest (Principle 8). Again, if a firm is dealing with a Power of Attorney, it must make sure that the Power of Attorney understands their role and responsibilities when making financial decisions for the donor. The advice has to be specific to the donor.

Considering the four main drivers of vulnerability, what are the key responsibilities for firms under the Guidance?

Firms must understand the needs of vulnerable clients and provide a flexible, tailored response. They should do this through the creation of a vulnerable customer policy that fits into all the firm’s processes, from the initial meeting to the ongoing reviews in retirement.

The four main drivers are health, life events, resilience, and capability. When considering its responsibilities for the four main drivers, a firm needs to assess and understand its clients’ needs and ask, ‘What will our customers become vulnerable to?’ As an example, a firm dealing with a young first-time home buyer may have to consider different potential vulnerabilities, for example, financial resilience, compared to a firm dealing with a recently widowed elderly client, where negative life events would be a consideration. The additional support for both may look very different.

About the expert
Karl Steadman is a retirement and later life specialist at Just Group.

What initial steps can firms take?

The first step is to put in place a vulnerable client policy that treats all clients fairly. It’s unrealistic for firms to be able to meet all issues relating to vulnerability, so a good policy would include signposting clients to specialist organisations such as Dementia Friends, Age UK and social services.

Introducing vulnerability into a conversation can be difficult and some clients may feel offended. Consider discussing the policy with a client early in the relationship to highlight the extra care a firm takes with its clients when providing a service that might last a lifetime. It can of course be rebadged as an ‘ongoing client wellbeing policy’.

What further action should be taken?

First, allow clients in vulnerable circumstances more time to think through any complex decisions that need to be made. Second, clients may be preoccupied, so to help them focus, try to hold client meetings in a calm, quiet environment where there are fewer distractions. Third, establish a variety of lines of communication. Some clients might have low digital capability and some will have difficulty meeting in person. Finally, to ensure the client fully understands the broader implications to their finances throughout the relationship, consider providing estate planning at an earlier stage.

In what ways can staff help?

Make sure your staff develop the skills, capability, and empathy to help in a range of circumstances, for example by sharing relevant briefings or training material created by charities, trade or professional bodies. UK Finance, a trade body for banking and financial services, for instance, published a ‘Financial abuse code of practice’ in 2018. Just Adviser has published guidance on consumer vulnerability. And the FCA published FAQs on its finalised Guidance in July 2020. They are grouped by theme, including sections on practical action for firms.

How can firms assist their staff with a client’s vulnerable circumstances?

Consider appointing dedicated vulnerability champions or teams, perhaps with different areas of expertise, to help discuss complex cases and offer support to frontline staff.

They should also develop ‘How to’ guides and knowledge bases on vulnerable circumstances that staff can use in their day-to-day roles, such as a signposting document to additional information or support. And they should monitor and evaluate progress. This could include collating management information that captures outcomes from clients in vulnerable circumstances. Then it’s a case of reviewing what worked well and what processes (if any) may need improving.

The full article was originally published in the October 2021 edition of The Review

The flipbook edition is now available online for all members. 

All CISI members, excluding student members, are eligible to receive a hard copy of the quarterly print edition of the magazine. Members can opt in to receive the print edition by logging in to MyCISI, clicking on My account, then clicking the Communications tab and selecting ‘Yes’.

Once you have read the print edition, keep coming back to the digital edition of The Review, which is updated regularly with news, features and comment about the Institute and the financial services sector. 
Seen a blog, news story or discussion online that you think might interest CISI members? Email
Published: 01 Dec 2021
  • Financial Planning
  • Integrity & Ethics
  • Communications
  • customersupport
  • vulnerable clients

No Comments

Sign in to leave a comment

Leave a comment