2023 - Vulnerable Persons Test

Vulnerable Persons 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.

Definition of Vulnerability

• The Financial Conduct Authority (FCA) defines a vulnerable consumer as 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 can occur in various ways, including permanent, temporary, or sporadic situations, and may not be recognized by the individual.

Identifying Vulnerable Clients

• Vulnerable clients may include those with:
  • Mental capacity deficiencies, including mental illness and dementia
  • Stress or financial shock, such as employment concerns, bereavement, or marital/relationship difficulties
  • Physical impairments that may not allow them to engage with automated or standard process requirements
  • Severe and long-term illness, including life-limiting or recovery-expected conditions
  • Little or no financial experience or access to mainstream financial services
  • Low income or existing distressed financial situation
  • Responsibilities for others, such as carers or acting as power of attorney
  • No access to the internet or other digital media
  • Poor language skills
  • General vulnerability due to age (e.g., clients aged 75 and over or 18 and under)

Assessment and Management of Risk

• Vulnerability does not automatically mean a client is unsuitable for advice and services.
• When engaging with a vulnerable consumer, staff will:
  • Provide additional opportunities for the client to ask questions
  • Continuously seek confirmation of understanding
  • Ask if there is anybody with them who can assist, and offer the opportunity to have a family member or friend present
  • Refer to another firm or third party if necessary

Reviewing Outcomes

• The firm will monitor for trends and understand how vulnerable characteristics may change over time.
• A 'client vulnerability record form' will be used to capture management information.
• The firm will review its vulnerable persons policy periodically to ensure consistency and adherence.

Rights and Responsibilities

• The firm's responsibilities include:
  • Abiding by the FCA's principles and rules
  • Ensuring staff are aware of and trained to identify and deal with vulnerable clients
  • Supporting individuals in relation to identified risk and vulnerability
  • Providing means of reporting instances of vulnerable clients
• Employees' responsibilities include:
  • Being familiar with the policy and procedures
  • Taking appropriate action in line with the policy
  • Reporting instances of vulnerable clients

Client Evaluation

• All clients will be assessed against the following criteria:
  • Actively seeking to encourage disclosure about potential vulnerability
  • Ensuring the approach taken is accurately reflected in business records
  • Considering whether to discuss the approach with colleagues/other professionals
  • Gathering sufficient details to support the advice and using additional questioning where appropriate
  • Considering any unusual aspects, such as undue influence from others
  • Understanding who the client is and the extent of the instructions needed
  • Setting a list of questions to check client memory recollection, where appropriate
  • Confirming any change in circumstances that might lead to vulnerability

Appendix 1: Target Market and Customer Base

• The firm has considered the characteristics of vulnerability likely to be present in its target market and customer base, including staff training and awareness, and the likelihood of dealing with consumers who are in a vulnerable position or have characteristics of vulnerability.