In Tim's latest blog, he explores how wider changes in society have accelerated the likelihood of clients being in vulnerable circumstances and why advisers still need to amend their approach and processes to truly help vulnerable clients.
It has been just over six months since the FCA issued their latest guidance for firms on the fair treatment of financially vulnerable customers. Since then, we have seen ‘Freedom Day’ appear on the horizon, get pushed back and reappear, rises, falls and further rises in Covid and pressures on our healthcare system, we have had a turbulent summer of cyclical weather, the withdrawal from Afghanistan and we are nearing the ending of the furlough scheme. Whilst many of these things may seem unrelated, all of them will have a direct impact on the levels of vulnerability faced by at least one sector or group of people in the UK.
The challenge facing firms regulated by the FCA is how, with such diversity of circumstances do we ensure we meet the guidelines and expectations of not just the FCA but also of our customers? Obviously, the tool we have created at Comentis is part of that and we are proud that the unique proposition we have created is supporting so many firms to identify and support customers who find themselves in vulnerable circumstances, but as with all tools, it is reliant on the professional to use it and use it effectively.
Whilst the guidance from the FCA has been welcomed with open arms by the industries that it regulates, it seems that more work needs to be done in enabling professionals to understand and embrace the need for change to current practice. Many professionals believe that they are already adept at identifying and supporting those customers that find themselves in vulnerable circumstances – and yet this seems to be in opposition to reality. After all, if that was the case why was there the need for the FCA guidance in the first place?
We’ve all heard the phrase “If nothing changes, then nothing changes” and this is never truer than in our approach to how firms identify and support vulnerable clients. It is clear, that currently firms are not identifying and documenting how they support the 53% of adults that the FCA believe are experiencing circumstances that may be creating a vulnerability and yet many professionals believe there is no need to change their systems or approaches.
The circumstances that create a vulnerability are often not those that are not immediately identifiable. I believe that our challenge is how do we educate those tasked with the detection and support of financially vulnerable customers to change and evolve their practice so that they can properly and efficiently use the tools at their disposal to do so.