“Life is Like a Box of Chocolates…”

You never know what you’re going to get.” So says the iconic quote from the iconic film Forrest Gump. It’s a film that asks questions about the nature of life, humanity and well ahead of its time, vulnerability.

Vulnerability is not new, although the use of that label has taken on a new significance in recent years. The FCA talking about Vulnerable Customers is not new either – launching their first consultation on the subject in 2019 and publishing their industry-wide regulatory guidance in February 2021. However, with the arrival of the Consumer Duty, the subject of Vulnerable Customers has received more attention, with many firms approaching the subject with a renewed focus.

Recent projections reported by the BBC suggest there will be 9.1 million people with a major health condition by 2040, a 37% rise in the latest data from 2019. As of May 2022, the FCA noted that 52% of UK adults (27.3m people) were classed as having one or more characteristics of financial vulnerability.

Much like Forrest Gump’s box of chocolates, there is a wide variety of characteristics of vulnerability. And just like Forrest Gump himself, people often have a great capacity to transcend what may be perceived by others as vulnerabilities. Vulnerability is a complex picture.

Going by the FCA’s thoughts on the matter, a Vulnerable Customer can be defined an individual who, due to their personal circumstances, is especially susceptible to harm. Whilst some may instinctively associate the term ‘vulnerability’ with long-term physical or mental impairments, it’s important to consider that the FCA has drawn its definition more broadly than that. 

Vulnerabilities can be temporary, permanent, or fluctuating. Given this widely drawn definition, it’s likely that almost every adult could be classed as vulnerable at some point in their lives. And that fact may be key when considering how we deal with vulnerable customers, as we can ask ourselves, “What kind of support would I want if I was going through a difficult period?”. Because at some point, you are likely to need the kind of support that the industry is now trying to imagine and implement.

Phrases like, “Including those with characteristics of vulnerability”, are peppered throughout the FCA’s guidance on the Consumer Duty. The prevalence of such phrases is largely behind the renewed focus on how the industry supports vulnerable customers. 

The first step to supporting customer with characteristics of vulnerability is identification. Without identifying the characteristics of vulnerability that may be affecting a particular customer, firms can’t deliver the right support to those customers. This is where advisers have a key role.

Advisers are often the people who have direct contact with customers and are therefore often in a good position to spot the signs of vulnerability. This doesn’t necessarily require lots of in-depth knowledge of psychology – whilst the term ‘vulnerability’ may appear slightly daunting, it is often a case of identifying circumstances where anybody’s decision-making could be affected.

If, for example, a customer contacts you and mentions they have suffered a bereavement, it’s possible that this may affect their decision-making for a crucial period of time. As noted above, most of us will go through periods of vulnerability, so it’s often as simple as asking, “What would I need in this situation?”. Even better, if your relationship with the customer allows it, you can ask the customer “What kind of support do you need at the moment?” 

It would be wise to avoid using words like “vulnerability” directly with customers. This is because it is not about them or their vulnerability, it’s about what support firms can deliver to help them achieve their financial objectives. It’s not about them, it’s about us. By asking questions that focus on what support customers may need, it helps to ensure they get what they need as one size does not fit all.

For example, not all customers with a sight-impairment can read braille. Understanding what customers truly need is an essential part of what we do, so this sort of conversation should be able to fit naturally into the normal conversations that we have with our customers.

As the financial services industry often operates in chains, many firms will already have mechanisms in place which will allow you to inform them about any characteristics of vulnerability your customers have and what support they may need. If you see those mechanisms then you should use them, as it will help firms deliver the right support to your clients. If a firm delivers support that helps a client with any characteristics of vulnerability, this will ultimately reflect back on you.

Forrest Gump transcended his perceived vulnerabilities, with the help and encouragement of those around him, to lead “no humdrum life”. There should be no reason why the financial services industry cannot support those in our society with characteristics of vulnerability to achieve all their financial objectives.