Our face-to-face events are back underway, and we have recently been reconnecting with hundreds of adviser companies for the first time in a couple of years.
When speaking to many of them, it is clear that they have a simple mandate; to ensure their clients receive the very best service, while continuing to operate a compliant and profitable business.
In all honesty, we have both worked with financial advisers for a couple of decades apiece, and this mandate has not changed markedly during this time in terms of intention.
However, the market – and the world – in which we find ourselves in 2022 has undergone a number of transformations. At the same time, regulatory requirements upon businesses have continued to increase.
The turbulence of the past few years in a whole breadth of areas means that we are potentially facing an unprecedented vulnerability epidemic.
The impact of the pandemic, the isolation and uncertainty that came with it, strains on families and relationships, global conflict and unrest, and much more, have hugely influenced people’s mental, physical and financial wellbeing. Those who were already vulnerable in some way may have found events of recent years extremely damaging, and some will have doubtlessly found themselves vulnerable in one or numerous ways for the first time.
While this will have affected us all personally, no doubt, there is a regulatory view on vulnerable persons that needs to be looked at, what it means to businesses, and what the upcoming consumer duty is likely to add to existing guidance.
As things stand – and this will not be changing any time soon – all businesses have a responsibility to set out an approach to dealing with vulnerable persons, which should be accounted for in its vulnerable persons policy. An important part of that policy is to understand the responsibilities the business has under its authorisation by the Financial Conduct Authority, and to ensure vulnerability is considered when acting on behalf of a client.
While for many the motivation to address how vulnerable clients are treated is rooted in regulation, there are many benefits of a robust policy, approach and culture for a company.
In addition to knowing you have done all you can to ensure you are delivering suitable guidance, addressing your stance on vulnerable customers can also strengthen your relationship with existing clients and introduce you to new generations of potential clients.
It is worth noting that the FCA has not – and will not – make specific rules to address each area of vulnerability, but instead establishes the responsibilities within its principles for all businesses.
Who are vulnerable persons?
It is difficult to explicitly define who is vulnerable, or what characteristics means a person should be considered vulnerable, as it is a wide ranging and often complex area. However, the FCA defines vulnerability as someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a business is not acting with appropriate levels of care.
There is no definitive list of the different types of vulnerability. Even if there were, different people react differently to different situations, and it is therefore important to:
- Understand the different types of vulnerability.
- Assess the impact it can have on those people and the decisions they take.
- Determine how your company deals with different people with different vulnerabilities.
