Partner content: How the regulator defines "vulnerable" customers

clock • 2 min read
Partner content: How the regulator defines "vulnerable" customers

What advisers need to know when it comes to protection and health insurance conversations

According to the FCA's most recent Financial Lives Survey[1], more than half of UK adults display at least one characteristic of vulnerability at any given time - a worrying trend that has been catalysed by the pandemic.

The regulator provides a wide set of characteristics to illustrate what it means by vulnerable, which, whilst not intended to be exhaustive, are fairly broad. The definition embraces anyone suffering as a result of a common life event such as a divorce - or even an income shock. The fact that someone is not vulnerable now does not mean they won't be at some point in the future. In fact, it's fair - and entirely human - to say that most of us will be vulnerable at some point.   

The FCA lists four key drivers of vulnerability and provides examples of their characteristics.

  1. Health: conditions or illnesses that impact day-to-day tasks
  2. Life events: such as bereavement, job loss, or relationship breakdown
  3. Resilience: low ability to withstand financial or emotional shocks
  4. Capability: low levels of financial capability, literacy or digital skills

There are relatively few people who won't face any of these issues at some point in their lives; getting sick, splitting up with a partner, losing a loved one or facing redundancy are common life events that most, if not all, of us can identify with. The regulator recognises that these challenges can impact on decision making and asks advisers to pay special attention.

When clients do become vulnerable, or display characteristics associated with vulnerability, it's important that they are dealt with in a way that feels human and appropriate to their needs.

Read Guide

When discussing protection and health insurance with both vulnerable clients, and clients more generally, there is a good chance a financial adviser will be talking about sensitive subjects, or that their client will have been impacted by a major life change, especially at claim stage. The same applies when discussing disclosures while taking out a new life or health insurance plan. This means getting the conversation right is crucial.

In our guide on identifying vulnerable customers and getting the conversation right, produced in association with Cover, we cover the five conversations that advisers need to have with customers, how to spot the vulnerable, and how to meet the needs of customers.

Access the guide.


[1] https://www.fca.org.uk/publications/research/financial-lives-2020-survey-impact-coronavirus

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