How to identify and support vulnerable clients
This guide can help you understand and identify the characteristics of vulnerable clients who are at risk of certain types of harm. It also explains how you can support them and how Royal London can help you meet their needs.
Within this guide you'll find information on:
The definition of a vulnerable customer
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. The nature of their vulnerability could even change over time.
The risk of a client becoming vulnerable is linked to four key characteristics that each have their own underlying drivers:
- 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.
Why it’s important that you understand vulnerable clients
The FCA expects all of your clients to be treated fairly, whether they have vulnerabilities or not. This means you must understand their vulnerable position and strive to achieve good outcomes.
Vulnerable clients may be unable to make clear decisions and represent their own best interests. It can affect the way they engage with you, as well as your services and their providers.
A client’s vulnerability may not be immediately obvious, but these statistics show how many UK adults are at risk of potential harm:
- 47% of UK adults show 1 or more characteristics of vulnerability
- 24% of UK adults have low financial resilience
- 60% of UK adults find keeping up with domestic bills and credit commitments a heavy burden or somewhat of a burden 1.
1 Financial Lives 2022 survey (opens in a new window)
How to identify a vulnerable client
We all go through difficult times in our lives as demands and pressures change, but we don’t always share this openly. That’s why it can be difficult to spot if a client needs extra support.
You may have clients who choose to disclose vulnerabilities directly, such as explaining they are hard of hearing and therefore phone conversations are difficult. Others may state them indirectly. For example they might say they’re struggling to read or understand information.
Other signals to look out for include the client:
- asking unrelated questions
- repeating themselves
- appearing distressed
- sounding flustered
- answering yes to each of your questions, but not appearing to keep up with the conversation
- making statements such as “My partner recently died”, “My partner always dealt with these things for me” or “I’ve recently lost my job”.
Whether directly or indirectly disclosed, a client is unlikely to use the word ‘vulnerability’ or understand that they might be classed as ‘vulnerable.’ You should be able to talk openly with vulnerable clients about their difficulties without using jargon terms like this.
Use data
Using your internal data or data from the providers you work in partnership with, can help you identify customers at risk of vulnerability. Signals include, but are not limited to:
- late or missed payments
- increasing frequency of withdrawals from their pension savings
- a claim on a protection policy
- a change to the level of income being taken from a pension plan, that may lead to retirement savings running out sooner than planned
- increasing or decreasing contact with your client, and out-of-character activity or behaviour.
Provide opportunities for disclosure
Giving clients the opportunity to disclose any medical conditions, or additional needs throughout your relationship with them can help ensure they get the support they need. Asking them if they are comfortable with you sharing this information with the provider, can also help the provider to support their needs.
- Your initial client meeting: Initial meetings with new clients give you the opportunity to seek and encourage disclosure about potential vulnerability or support needs and ask for further information
- Your regular client reviews: By ensuring existing clients have regular reviews, you can identify if there’s been a change to their personal or financial circumstances. For example, if there’s been a change in character, they’ve had to take on additional caring responsibilities or if there could be a potential conflict of interest (e.g. where there’s a joint policy, but there’s a breakdown in the relationship)
- Client feedback surveys: Client feedback surveys can indicate if a client needs additional support or would prefer to receive information in a specific format. Asking about their communication preference or any improvements you can make to your service can provide valuable insights.
All of the above can help you understand:
- if your normal advice process is appropriate to your client’s needs
- if the product you’ve recommended remains suitable or
- if the method of service delivery or support you or the provider offers needs to be flexed to avoid causing foreseeable harm.
- Have flexible processes: this enables you to offer more support to clients who have additional needs, such as offering verbal or written approvals for those with physical or mental health difficulties
- Use protective policies: for example, you could limit how often a client makes pension withdrawals if they’re prone to making impulsive financial decisions
- Recognise trigger points: understanding the factors that cause particular client behaviours can help you identify vulnerabilities and act accordingly.
You could look to introduce a plain-English vulnerability policy that outlines your procedures, support options and approach in one clear place. This can reassure clients and their families that you are considerate of their needs and will do your best to support them.
You could even assign a vulnerability champion within your firm, who can review and adapt your policy over time, and create training plans for your staff so they can stay informed.
Communication needs aren’t just about how you deliver information to clients in a written or spoken way. You also have to consider where, when, and how you are giving information to them.
You can support your client’s communication preferences by:
- Asking them directly: you can openly ask clients which form of communication is most useful to them, such as audio, written, face-to-face and braille
- Offering flexibility: to put vulnerable clients at ease, you can be flexible about where and when appointments are held – perhaps in your office or at their home
- Reviewing your on-site accessibility: you can also consider how accessible your office is for clients with health conditions or disabilities
- Considering how complex the information is: too much information at once can prove overwhelming for certain vulnerable clients, so you can consider if complex issues should be spread across more than one appointment, instead of discussed all at once.
You can improve the clarity and usefulness of your communications by:
- Giving clients everything they need: it’s important that clients have all the necessary information, including key product details, at the point of sale, as well as ensuring they receive ongoing information post-sale, such as policy updates or monthly statements.
- Offering the right information at the right time: all clients should be given information at the right time, presented in a way so they can clearly understand the product, including how it works, benefits, risks, and costs – so they can make good decisions
- Reducing jargon and technical terms: to make communications easier to understand, you should clarify and reduce jargon and technical wording using plain-English terms.
- Breaking it up: if a client needs to know a lot of information about a product or topic, you should think about how to break it up into a series of smaller, clearer communications, or relay the information over several face-to-face meetings instead of one
- Gathering and applying feedback: you should request feedback from clients around how clear, accessible and usable your communications are, then use this information to adapt your communications to meet the needs and vulnerabilities of your clients.
When making recommendations or giving advice, you should check if your clients understand the information they’re being given at each step of their journey. This includes their understanding of any risks and benefits of the products you recommend, or the service you’re providing.
If there’s anything they don’t understand, you may have to explain things in more detail or present the information in a different way, such as case studies or illustrations.
Instructing an LOA means your client has a record of the person or people they trust to correspond on their behalf, in the event they lose capacity to do so, for example, if they are in hospital.
The appointed third party then has authority to be given policy information, or change adviser servicing rights assigned to a policy. They do not have the authority to make changes to a policy; this can only be done through a Power of Attorney or Court of Protection.
There may come a time when your clients may no longer want or are no longer able to make financial or other decisions for themselves. Setting up a POA enables them to give one or more trusted friends or family members the legal authority to make decisions, on their behalf. Your clients can set up a POA to look after their property and financial decisions as well as health and welfare decisions, should they lose the ability to make those decisions themselves.
Appointing a POA is not just for older and wealthier people – it’s important for everyone to consider. If your client doesn’t have a POA in place and they lose the ability to make their own decisions their friends and family may need to go to court to request a Court of Protection order, which would give them authority to make decisions on your client’s behalf. This can be costly and time consuming.
We therefore recommend making all clients aware of the benefits of setting up a POA (opens in a new window) when they are in good health.
- Have flexible processes: this enables you to offer more support to clients who have additional needs, such as offering verbal or written approvals for those with physical or mental health difficulties
- Use protective policies: for example, you could limit how often a client makes pension withdrawals if they’re prone to making impulsive financial decisions
- Recognise trigger points: understanding the factors that cause particular client behaviours can help you identify vulnerabilities and act accordingly.
You could look to introduce a plain-English vulnerability policy that outlines your procedures, support options and approach in one clear place. This can reassure clients and their families that you are considerate of their needs and will do your best to support them.
You could even assign a vulnerability champion within your firm, who can review and adapt your policy over time, and create training plans for your staff so they can stay informed.
Communication needs aren’t just about how you deliver information to clients in a written or spoken way. You also have to consider where, when, and how you are giving information to them.
You can support your client’s communication preferences by:
- Asking them directly: you can openly ask clients which form of communication is most useful to them, such as audio, written, face-to-face and braille
- Offering flexibility: to put vulnerable clients at ease, you can be flexible about where and when appointments are held – perhaps in your office or at their home
- Reviewing your on-site accessibility: you can also consider how accessible your office is for clients with health conditions or disabilities
- Considering how complex the information is: too much information at once can prove overwhelming for certain vulnerable clients, so you can consider if complex issues should be spread across more than one appointment, instead of discussed all at once.
You can improve the clarity and usefulness of your communications by:
- Giving clients everything they need: it’s important that clients have all the necessary information, including key product details, at the point of sale, as well as ensuring they receive ongoing information post-sale, such as policy updates or monthly statements.
- Offering the right information at the right time: all clients should be given information at the right time, presented in a way so they can clearly understand the product, including how it works, benefits, risks, and costs – so they can make good decisions
- Reducing jargon and technical terms: to make communications easier to understand, you should clarify and reduce jargon and technical wording using plain-English terms.
- Breaking it up: if a client needs to know a lot of information about a product or topic, you should think about how to break it up into a series of smaller, clearer communications, or relay the information over several face-to-face meetings instead of one
- Gathering and applying feedback: you should request feedback from clients around how clear, accessible and usable your communications are, then use this information to adapt your communications to meet the needs and vulnerabilities of your clients.
When making recommendations or giving advice, you should check if your clients understand the information they’re being given at each step of their journey. This includes their understanding of any risks and benefits of the products you recommend, or the service you’re providing.
If there’s anything they don’t understand, you may have to explain things in more detail or present the information in a different way, such as case studies or illustrations.
Instructing an LOA means your client has a record of the person or people they trust to correspond on their behalf, in the event they lose capacity to do so, for example, if they are in hospital.
The appointed third party then has authority to be given policy information, or change adviser servicing rights assigned to a policy. They do not have the authority to make changes to a policy; this can only be done through a Power of Attorney or Court of Protection.
There may come a time when your clients may no longer want or are no longer able to make financial or other decisions for themselves. Setting up a POA enables them to give one or more trusted friends or family members the legal authority to make decisions, on their behalf. Your clients can set up a POA to look after their property and financial decisions as well as health and welfare decisions, should they lose the ability to make those decisions themselves.
Appointing a POA is not just for older and wealthier people – it’s important for everyone to consider. If your client doesn’t have a POA in place and they lose the ability to make their own decisions their friends and family may need to go to court to request a Court of Protection order, which would give them authority to make decisions on your client’s behalf. This can be costly and time consuming.
We therefore recommend making all clients aware of the benefits of setting up a POA (opens in a new window) when they are in good health.
Our Business Development managers can share insights with you based on our pension and protection data, that can help you have timely conversations with clients to help them avoid foreseeable harm.
For example, our insights can let you see if there has been any activity that may signal potential vulnerabilities. This includes any protection policy claims made, missed policy payments or unsustainable income withdrawal on a pension plan.
Watch our webinar we recently ran on vulnerable customers.
Find out more about our pension insights and protection insights.
Our customer communications are tested and reviewed to ensure they have a clear purpose, are easy to understand and include information that could help your clients achieve their financial objectives.
We also offer communications in alternative formats such as braille, large print, or audio. Our website and email communications have been designed with accessibility in mind, so you can feel confident we’ll support all your clients, including those with vulnerabilities.
Both our mobile app (opens in a new window) and customer website give your clients access to a range of financial wellbeing guides and articles, written by our in-house experts. These cover key topics like budgeting, dealing with life events including bereavement, and understanding investing.
Workplace pension scheme members also have access to our free financial wellbeing service which offers financial guidance and advice to help them manage debt, budgeting, long-term saving, and retirement planning. It offers a personalised experience, so they’ll only see information that’s relevant to them.
Helping Hand gives clients with a Royal London protection policy access to a range of hand-picked early care medical services and support with physical or mental illness, injury or bereavement.
Helping Hand is available for the plan owner or their partner and children - even if your client doesn't make a claim.
Our health and wellbeing directory (opens in a new window) helps your clients access support services in their area. This includes age-related support, help with bereavement, domestic abuse or housing support. The directory aims to help all customers understand the support that’s available to them, so they can access it when they need it.
Our Business Development managers can share insights with you based on our pension and protection data, that can help you have timely conversations with clients to help them avoid foreseeable harm.
For example, our insights can let you see if there has been any activity that may signal potential vulnerabilities. This includes any protection policy claims made, missed policy payments or unsustainable income withdrawal on a pension plan.
Watch our webinar we recently ran on vulnerable customers.
Find out more about our pension insights and protection insights.
Our customer communications are tested and reviewed to ensure they have a clear purpose, are easy to understand and include information that could help your clients achieve their financial objectives.
We also offer communications in alternative formats such as braille, large print, or audio. Our website and email communications have been designed with accessibility in mind, so you can feel confident we’ll support all your clients, including those with vulnerabilities.
Both our mobile app (opens in a new window) and customer website give your clients access to a range of financial wellbeing guides and articles, written by our in-house experts. These cover key topics like budgeting, dealing with life events including bereavement, and understanding investing.
Workplace pension scheme members also have access to our free financial wellbeing service which offers financial guidance and advice to help them manage debt, budgeting, long-term saving, and retirement planning. It offers a personalised experience, so they’ll only see information that’s relevant to them.
Helping Hand gives clients with a Royal London protection policy access to a range of hand-picked early care medical services and support with physical or mental illness, injury or bereavement.
Helping Hand is available for the plan owner or their partner and children - even if your client doesn't make a claim.
Our health and wellbeing directory (opens in a new window) helps your clients access support services in their area. This includes age-related support, help with bereavement, domestic abuse or housing support. The directory aims to help all customers understand the support that’s available to them, so they can access it when they need it.