Vulnerable Customers

The Financial Conduct Authority (FCA) outlines a vulnerable customer as ‘Someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care’.

All of your clients could be at risk of becoming vulnerable in a permanent or temporary way during their life. The nature of their vulnerability could even change over time though.

The risk of one of your clients becoming vulnerable is linked to four key characteristics that each have their own underlying factors:

• Health: physical disabilities, severe or long-term illness, hearing or visual impairments, mental health challenges, and disabilities that result in low mental capacity or cognitive issues
• Life events: caring responsibilities, bereavement, income shocks such as redundancy, loss of job or inability to work through illness, separation or divorce, and having non-standard requirements such as ex-offenders, care leavers or refugees
• Resilience: low or inconsistent income, being in debt, low savings, lack of support from family or friends, and low emotional resilience – such as making impulsive financial decisions
• Capability: learning difficulties, low English language skills, poor literacy or numeracy skills, a lack of digital skill, and low knowledge or confidence in managing financial matters.

Please see the two guides for further information on this matter, one is the Vulnerable Customer Best Practice Guide and the other is the Vulnerable Customers Policy.