Regulation 

Advisers urged to share vulnerable client policies

Advisers urged to share vulnerable client policies

Financial advisers working with law firms should open a dialogue around implementing a vulnerable client policy, a Society of Later Life Advisers (Solla) conference heard last week (5 September).

Addressing the audience at the quarterly assembly, David Mulholland, business development manager at Brooks Macdonald Asset Management, said the Financial Conduct Authority (FCA) will soon be proactively assessing how independent financial advice firms implement vulnerable client policies and warned lawyers, advisers and clients had to work as a team to satisfy this.

The Solicitors Regulation Authority (SRA) offers guidance around third party instruction with vulnerable client interaction and Mr Mulholland said it was prudent for advisers to share their policy with law firms as part of their due diligence process.

He said: "This can promote a better understanding of the services on offer from holistic financial planners, and provide reassurance to the referring solicitor that vulnerable clients, perhaps with quite specific or non-standard requirements, receive an appropriate service from their financial adviser."

With a new SRA code of conduct due for implementation next year, it is expected to require all law firms to have a better understanding of the organisations they refer clients to and Mr Mulholland said an agreement in writing should be in place before a referral is made.

The FCA released an occasional paper on consumer vulnerability in 2015, outlining its guidance and definition of vulnerability, which it moved to maintain earlier this year when it said "vulnerability can come in a range of guises, and can be temporary, sporadic or permanent in nature". After further consultation early next year, the regulator is expected to review how vulnerable client policies are implemented within the industry.

Mr Mulholland said the industry had seen some positive strides since but many financial services providers were still looking to improve accessibility to services, to assist those clients who may struggle to discern their inherent value.

Peter Chadborn, director and adviser at Plan Money, said any further guidance from the FCA on vulnerable client policy should be welcomed - especially by smaller firms who may not be part of a network that has broader systems in place to address vulnerability concerns.

Mr Chadborn said: "The more parties involved in a vulnerable client’s case, the less likelihood there is that something undue is being overlooked - when working alongside solicitors in certain cases, with both parties involved there is less chance of a client being left exposed."

rachel.addison@ft.com

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