Financial advisers have been told they have a responsibility to understand the potential vulnerability of their later life clients and to be able to evidence that assessment.
Speaking last week (June 25) at the National Later Life Adviser conference, in association with the Equity Release Council, Tim Farmer, founder of TSP Mental Capacity Assessors, urged advisers to fully understand any vulnerabilities their clients may have.
The Financial Conduct Authority defines a vulnerable consumer as someone who due to personal circumstances is susceptible to detriment when a firm does not act with appropriate levels of care.
Mr Farmer highlighted various contributing factors to vulnerability, including the state of the individual, wider environmental factors and lender inactivity in the later life space.
Mr Farmer said: "Every client you see is potentially vulnerable. You need to get to know them, to get to know their key life stages, because that will impact the advice you give."
The financial advice industry has already been encouraged to create greater protections for vulnerable clients through financial inclusion.
In its report on consumer access to financial services published in May MPs on the Treasury select committee urged the industry to step up its game on financial inclusion.
Nicky Morgan, chair of the Treasury select committee, said at the time: "The financial inclusion of vulnerable consumers – and we can all be vulnerable at some point in our lives – should be of the utmost priority for financial services providers, the government, and financial regulators."
The Treasury committee requested that clear expectations of how financial service providers should treat vulnerable consumers be published by the FCA to plan for all the sectors it regulates.
The industry has since been moving to address the issue through the launch of adviser training, developed by Just Group and the Society of Later Life Advisers, to identify and service vulnerable customers.
The training, now backed by the Personal Finance Society, includes a training tool for older and vulnerable consumer care which is offered free to advisers.
Keith Richards, PFS chief executive, said: "Advisers are aware of an increasing expectation on them to show they can identify and support their vulnerable clients.
"It is important they have access to resources that can help them fully understand what is a difficult and diverse issue."
Jonathan Warren, consultant at Altus, said "advisers qualified in later life advice are going to be critical in assessing vulnerability".
But warned while technology improved the potential to assess vulnerable people online, it "feels open to manipulation, particularly mindful of third-party coercion, in a way that is much more difficult in an in-person context."
Tali Fraser is an intern at FTAdviser