AIM OF THIS POLICY

The aim of this policy is to outline the practice and procedures for staff to contribute to the prevention of detriment to clients who find themselves in vulnerable circumstances.

 

The policy covers all staff within the firm, and in particular, those operating in areas that deal directly with customers.

 

DEFINITION OF VULNERABILITY

The Financial Conduct Authority (FCA) has developed the following definition to guide our work in this area:

 

“A vulnerable consumer to be someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.”

 

Vulnerability occurs in a variety of ways which may be permanent, temporary, or even sporadic, dependent on its nature.  In many circumstances the individual may not recognise themselves as ‘vulnerable’.

 

We recognise that vulnerability may not be simply due to the situation of the consumer but caused or aggravated by the actions or processes of the firms they may deal with.

 

We recognise that clients who might be considered as being in vulnerable circumstances could include clients with:

 

1. mental capacity deficiencies (including language or communication), including mental illness and dementia

2. stress or subject to financial shock of all types, such as employment concerns, bereavement (or potential bereavement), marital or relationship difficulties

3. a physical impairment that may not allow them to engage with automated, or other standard process requirements (such as photographic ID, phone keypad recognition, or internet applications)

4. severe and long-term illness (both life-limiting and where recovery is expected)

5. little or no financial experience or have no access to mainstream financial services

6. low income

7. an existing distressed financial situation

8. responsibilities for others, such as ‘carers’ or acting as power of attorney

9. no access to the internet or other digital media

10. poor language skills

11. a general vulnerability due to being aged 75 and over or aged 18 years and under

 

As a firm we must remain mindful of the potential for enquiry by these clients and the potential for any change of circumstance in respect of existing customers.

 

IDENTIFICATION OF CLIENTS IN VULNERABLE CIRCUMSTANCES

Vulnerability is broad and may occur at any time.  It will usually involve the interplay of characteristics of the individual, their circumstances, and static or transitory status.

 

We only deal with customers in vulnerable circumstances where we are aware of their needs:

 

1. mental capacity deficiencies – the FCA provides clear guidance on the identification of mental capacity limitation issues in their Handbook

2. stress  or financial shock – may be identifiable (facial expression, posture or stance etc.), but otherwise may be revealed through conversation before and during interview

3. physical impairment – may be identified visually, or through interview

4. severe and long-term illness – may be identifiable through conversation or through interview

5. financial inexperience – may be identified through the factfind process and their credit profile

6. low income – may be identified through interview and credit profile

7. in financial distress – may be identified through interview and credit profile

8. carers – may be identified through interview or conversation

9. digital exclusion – identifiable through interview or via routes of engagement (or non-engagement) with the firm

10. poor language skills – may be audible or identifiable via routes of engagement with firm

11. clients aged 75 and over or clients aged 18 years and under – should be offered the opportunity to have a relative or friend accompany the client to a meeting

 

The nature of the need area to be addressed may also indicate vulnerability.  For example, people wanting to arrange:

 

• An equity release product

• Right-to-buy

• A first-time buyer mortgage

• Debt consolidation or further credit

• Debt management

• The provision of long-term care

• Excessive monetary withdrawals from investments

 

These could be some indicators of vulnerability but this is not designed as an exhaustive list. In the circumstances that apply to our firm we will apply additional safeguards, as appropriate, to ensure fair treatment. This will apply to each individual but where we identify groups of the same people we may established a process aligned to the needs and circumstances of that group.

 

We have outlined at Appendix 1 the vulnerabilities we expect to be present in our target market and customer base. 

 

ASSESSMENT AND MANAGEMENT OF RISK

Just because somebody is vulnerable does not automatically mean that they are unsuitable for the

advice and services our firm supplies. As soon as we think we may be engaging with a vulnerable

consumer we will make a record of this and ensure we adhere to this policy.

 

When speaking to the vulnerable consumer we will:

 

• Provide additional opportunities for the customer to ask questions about the information we have provided.

• Continuously seek confirmation that they have understood the information that has been provided.

• Ask if there is anybody with them who is able to assist them and offer them the opportunity to have a family member or friend present during the conversation.

 

Where we feel we do not have the expertise to deal with the client due to their personal situation we will make every attempt to refer them to another firm or third party for the appropriate level of support to be provided.

 

HOW WE WILL REVIEW OUTCOMES

As a business we understand that we need to monitor for trends and understand how vulnerable characteristics may change over time in relation to our target market and customer base.  We will capture management information so we can monitor for trends, learn from experience and improve our support to customers. 

 

We will use a ‘client vulnerability record form’ in those instances where our service has been directly impacted due to the client’s vulnerable situation.  We will use this information to monitor that we meet the needs of our customers and improve our support in this area.  This will allow us to review our vulnerable persons policy periodically.

 

Additionally, we have access to a dedicated compliance support provider who offer a ‘Vulnerable Persons Hub’ that includes guides and sales support, regulation and bulletins, events and training, and signposting and links to speciality and charitable organisations.

 

Understanding the benefits to our firm

 

Supporting customers and clients who are in a vulnerable position is not just a regulatory but is also a moral responsibility. We intend to fulfil our duties in this area and as a firm we see the benefits in adopting the right approach. These include:

 

• Reduction in complaints

• Greater client satisfaction

• Engagement from a particular client set

• Reputational benefits

• Good publicity

• Improvement of overall “culture”

 

We will review our practices periodically for consistency and to determine adherence to the stated policy.

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The following table illustrates mitigating actions for clients with mental capacity deficiencies (for the avoidance of confusion “competent person” means an individual without the limitation presented by the client):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RIGHTS & RESPONSIBILITIES

Our responsibilities:

 

• To abide by the FCA’s principles and rules in this area

  • FCA Principles for Business 2,3,6,7 & 9;

  • TCF Outcomes 1,2 & 4

  • Consumer Duty Principle 12 (from 31st July 2023);

  • Conduct of Business Rules;

  • Senior Manager Conduct Rules;

  • Individual Conduct Rules.

• To ensure staff are aware of this policy and are adequately trained to identify and deal with clients who are or may appear “vulnerable”

• To support individuals in relation to identified risk and vulnerability

• To provide means of reporting any instance where they believe that a client might be in vulnerable circumstances

 

Responsibilities of our employees:

 

• To be familiar with this policy and procedures, and be able to recognise where additional support or sign-posting to other agencies may be required

• To take appropriate action in line with this policy

• To report any instance where they believe that a client might be in a vulnerable circumstance, and act accordingly in line with the policy

 

 

Identification of and treatment of vulnerable clients – Client Evaluation

 

The bullet points below set out our approach to dealing with all individuals and help us to determine their circumstances and if they are in a permanent or temporary vulnerable situation. These guidelines will be distributed to all staff and each will be trained on the areas relevant to their role.

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• Assess the client against our vulnerability policy

• Actively seek to encourage disclosure about potential vulnerability

• Ensure the approach taken is accurately reflected in the business records

• Consider whether to discuss the approach with colleagues/other professionals

• Ensure the know your client information gathers sufficient details to support the advice and uses additional questioning where appropriate

• Consider any unusual aspects – e.g. if someone else is accompanying a client, is there the potential for undue influence from that person

• Understand who the client is and the extent of the instructions needed to act on e.g. Power of Attorney

• Consider whether the client is acting differently/showing signs of a change of character

• Set a list of questions to check client memory recollection, where appropriate

• When working with more than one person, is there the potential for any conflict of interest or undue influence?

• Confirm any change in circumstances which might lead to vulnerability e.g. taking on caring responsibilities

• Establish whether the client’s stated needs and objectives align with their current circumstances

• Consider whether the standard sales process or specific vulnerability group process is appropriate to the client’s needs

• Identify products/solutions that are clear and easy to understand for those showing signs of vulnerability

• Consider whether there is a need to adjust the delivery and format of communications e.g. providing a report in large print

• Explain all matters with no or limited use of jargon

• Try to accommodate flexibility around appointment locations and times e.g. visiting the client at their home at their preferred time of the day

• Try to determine if the duration of the meeting will need extending to accommodate more detailed explanations and delivery of information

• Determine if the complexity of the advice will require delivery over a greater number of meetings

• Considered the accessibility of office visits for those with health conditions/disabilities

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APPENDIX 1

OUR TARGET MARKET AND CUSTOMER BASE

 

We have considered what characteristics of vulnerability are likely to be present in the target market and customer base of Financial Framework Wealth & Estate Planning Ltd and what steps we can take to mitigate risk and deliver good outcomes.  These considerations are outlined below:

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Staff training and awareness

• Staff training was undertaken in September 2022 and for the second year we used the competent adviser module. Cheryl, Simon and Will attended the ‘Just retirement’ course and this will be obligatory for everyone else.

• There is a ‘vulnerability Hub on the Simple Biz Website and Cheryl will ask all staff to read the relevant parts or attend the webinar.

•  Cheryl and Adele have experience through the sophistication, age and Vulnerability of younger clients who are beneficiaries of family trusts experience.   

•  vulnerability awareness will form part of staff members ongoing CPD / training and competency

 

Likelihood of dealing with consumers that are in a vulnerable position or have characteristics of vulnerability.

• Our target markets are the wealthy and the sophisticated where Vulnerability will be present, and we are aware of this within the existing customer base.

• We expect to encounter a medium-high numbers of customers with characteristics of vulnerability.

• But will not target vulnerable customers.

 

Characteristics of vulnerability in our target market and / or customer base

The vulnerable characteristic of the firm’s clients are mainly health, life events, financial resilience and/or capability and will be related to the products or services offer particularly Tax and Trust planning LPA’s and therefore Attorney ship and as Executor. 

 

Products or services we arrange where individuals could be at a heightened risk of being deemed vulnerable

Products and services will include the above and also as a life event retirement and post-retirement death benefits and distribution e.g., drawdown contracts, investment withdrawals, later life products, equity release etc.

 

How we will adapt our services to meet the needs of vulnerable customers and deliver good outcomes.

For examples where there is a hearing or visual impairment – or where the understanding due to say the age of the client is slower than usual, we would add an additional meeting or communication would take different formats e.g. use of video where possible add an ‘executive summary’ or invite sisters or brothers or children to participate in the meeting or if relevant a family friend e.g. Doug Beverley. We would adapt our meeting style and methods of communication in a way that would support the consumers understanding and we would look to product manufacturers for support in this respect in relation to materials they produce.

 

Mental health condition, disability or loss of capacity – where necessary we would consider the use of third-party support and legal mechanisms, including Power of Attorney, to support customers who cannot make their own decisions.  We proactively discuss the importance of putting POA in place with our clients and explain the disadvantages if this is not in place.

 

Over-indebtedness or erratic income – we would assist the client with their situation, for example, by looking to reduce their interest payments by way of re-finance.  Alternatively, we would consider involving a third party, and where appropriate make a referral or recommendation to an appropriate specialist organisation or debt charity.

 

Relationship breakdown, bereavement, heightened stress and anxiety – we recognise that this is likely to be emotionally challenging for the customer which may affect decision making.   We will adapt our service by offering more time, additional meetings where appropriate, e.g., where the client is not focused on the discussion, and/or invite a third party to support the client.  Where we are aware of dedicated support services available, e.g., at a provider/lender, we will look to ensure the customer is handed to a specialist team.

 

Resources available from 3rd parties, e.g., specialist organisations, product manufacturers.

We can provide links to companies/charities/associations which may be able offer additional support/services such as:

 

Citizens Advice Bureau

Department for Work and Pensions

Age Concern

Victim Support