Red pen

Five top tips to building a vulnerable customer policy

1 month ago

At the end of July, the FCA published its most recent draft guidance on vulnerable customers, picking up on feedback it had received on its consultation last year.

Treating vulnerable customers well remains a key priority for the FCA. It wants firms to do more to make sure vulnerability is taken seriously and that vulnerable customers are receiving positive outcomes.

The next step is to finalise the guidance – late this year or early next year. However, firms should already be well advanced with developing their approach to vulnerable customers. In interviews with senior managers, the FCA will want to know how firms have embedded fair treatment of vulnerable customers into their firm.

Developing a robust vulnerable customer policy is vital. Here are five top tips on how to do that.

1. Look at what you do currently

When building a policy, don’t reinvent the wheel.

You could start by looking at what you already do. You will already have vulnerable customers and may have naturally developed different and more appropriate ways of treating them. Staff’s experience of your customer base will be valuable, as well as the techniques they have already developed to identify and deal with vulnerability.

2. Embed the policy into the culture of the firm

The FCA is clear this is more than just developing a policy.

The principles of how the firm identifies and treats its vulnerable customers should be ingrained into the culture of the firm. This goes beyond a mere tick-box exercise; instead, the FCA is keen the principles should change the way that all staff in the firm both think and react in all aspects of their job.

Watching out for vulnerable customers and following strategies to treat them well should just be something your firm does.

3. Include frontline staff

Frontline staff can play an important part in the execution of an adviser firm’s policy. They can spot signs of potential characteristics of vulnerability – for example stress, grief or depression – and should know how to respond. One key change the FCA has proposed is moving away from a stark definition of people being either vulnerable or not to a ‘spectrum of risk’, where everyone fits in somewhere.

FCA research shows staff who were able to sympathise with vulnerable customers and get these customers to confide in them made a big difference to the customers’ overall experience with the firm.

The policy could advocate the creation of ‘vulnerability champions’. These are specialist staff members who others can ask questions of or refer particularly vulnerable clients to if need be.

4. Develop flexible processes

Many problems vulnerable customers experience relate to poor interactions or systems that are unable to flex to meet people’s needs, making people’s situations more difficult.

Think about how people could be served in a slightly different way. For example, changing ways of communicating or how forms must be completed. And empower your staff to offer this flexibility when they think it’s appropriate.

5. Review your policy

Instead of developing a policy, carrying out initial training and then letting it slide in importance, the FCA wants firms to regularly review the policy.

Firms could devise a framework to regularly assess and test how well the policy is working, and then put into place a programme of improvements.

Sharing good practice amongst your peers can really help. Understanding how others have tackled this issue will help you build a more robust policy.

Achieving positive outcomes for vulnerable customers is a key priority for the FCA in this new decade. Your approach and the policy you develop shouldn’t just sit on a shelf collecting dust. Instead, it has to be embedded into your culture, policies and processes throughout the whole customer journey.

This article was previously published by FT Adviser

Profile Picture
Rachel Vahey

Rachel Vahey

Job Title
Senior Technical Consultant

Rachel is a Senior Technical Consultant helping financial advisers and planners understand the changing pensions and savings environment, as well as how new legislation and regulation affects them and their clients. She’s well known within the pensions and savings industry, and regularly speaks at AJ Bell events, alongside writing content and articles for our website.

Financial adviser verification

This area of the website is intended for financial advisers and other financial professionals only. If you are a customer of AJ Bell Investcentre, please click ‘Go to the customer area’ below. 

We will remember your preference, so you should only be asked to select the appropriate website once per device.

Scroll to Top