How to Assess Vulnerable Customers

Vulnerable Customers Awareness

It is essential that FCA authorised firms know how to assess vulnerable customers. This means understanding what a ‘vulnerable customer’ is and learning how to identify people, situations and circumstances. Potential vulnerabilities can crop up in any customer-business relationship. For this reason, it is mandatory for vulnerable customer awareness to be a focal point in every regulated business strategy.

Some vulnerabilities are known as ‘static vulnerabilities’, meaning they do not change and are usually a continued issue for the person identified as vulnerable. These include issues such as sight and hearing difficulties, long-term disabilities, language barriers and age related factors.

There are also some vulnerabilities that are ‘fluid’ and can change depending on the person, circumstances and/or environmental factors. These include issues such as bereavement, mental health, short-term illness and financial difficulties.

How to Identify a Vulnerable Customer

Not all individuals who are vulnerable will want or know to disclose their circumstances. Whilst some people may not want to discuss being vulnerable, others may simply not know that their circumstances could see then at a disadvantage.

Listening and asking questions are the 2 most important tools when identifying vulnerable customers and potentially vulnerable circumstances. Asking specific questions with empathy and understanding can help an individual to disclose information that helps you and them.

However, it is not just asking the right questions that is important. Customers will often disclose information as part of their conversation with you and it is your responsibility to look out for certain circumstances or situations that could result in one or more vulnerabilities.

The ‘TEXAS Model’ Approach

The ‘TEXAS Model’ is used several advocates of vulnerable customers, including The Money Advice Liaison Group (MALG) and the FCA. This model outlines an easy to remember acronym format that results in the effective management and monitoring vulnerability disclosures.

The steps of the model include: –

• Thanking the customer for their disclosure.
• Explaining how their disclosed information will be used.
• EXplicit consent or carrying out checks to ascertain if the customer objects to data processing.
• Asking the customer questions to find out key information to understand the situation better.
• Signpost to internal support, or to external services with specialised expertise.

Supporting Vulnerable Customers

Where a customer is identified as being (or potentially being) vulnerable, it is then the firm’s responsibility to support them and ensure that the vulnerable customer framework is followed. Each business will have their own processes for mananging and monitoring vulnerabilities. However, there are some steps that should be consistent for all business types and sectors.

• Ensure that all staff are provided with the training and tools to identify, understand, and deal with vulnerable circumstances and vulnerable customers.
• Always follow up verbal discussions and information (i.e. face to face and telephone calls) in writing. This includes providing written advice, signposting, detailing discussed content and any relevant terms and conditions and and/or disclosure information. This provides the customer with the time and space to digest the information and get help where required.
• Make sure customers identified as vulnerable are flagged as such as that any automated functions are halted and future agents/third-parties have the necessary information to hand.
• Ensure any staff on the front line are provided with additional vulnerable customer training and given appropriate lines of reporting should they need to escalate a matter.
• Provide clear, visible and barrier free ways to contact you and communicate. A choice of communication methods should be made available so that all customers have a suitable option for making contact with the firm.
• Ensure that all written materials are clear, to the point and jargon free.
• Ensure that where applicable, products and services are flexible and are suitable for a range of customers, including those with vulnerabilities or different needs and requirements.
• Deal with any authorised third-party in a helpful and transparent manner.
• Ensure that any sensitive and/or confidential information disclosed regarding the customers’ vulnerability is safe and secure and used, stored and destroyed in accordance with UK GDPR.

Vulnerable Customer Templates

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Our portfolio of Vulnerable Customer Templates & Tools include customisable policies, user-friendly procedures, gap analysis checklists and professional training packages.