Understanding vulnerability

The Financial Conduct Authority (FCA) defines vulnerability 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 is often hidden, can be temporary or long-lasting, and can impact anyone. The 2022 Financial Lives Survey revealed that 47% (or 24.9 million) of UK adults showed one or more characteristics of vulnerability.

The FCA identifies four main drivers that contribute to vulnerability:

1. Health - This includes physical disabilities, severe or long-term illnesses that affect daily life, difficulty seeing or hearing, mental health conditions, addiction, or mental capacity.
2. Resilience - This means having the ability to handle unexpected financial challenges. People with low or inconsistent income, high debt, limited savings, or low emotional resilience might be more vulnerable. 
3. Life events - Going through major life changes like losing a loved one, losing a job, breaking up with a partner, experiencing abuse, caring for someone, or moving to a new location can all make someone more vulnerable.
4. Capability - Low financial knowledge and confidence, learning difficulties, poor literacy and digital skills, or low English language skills can all impact a client's ability to make an informed decision.

Identifying vulnerability

When interacting with clients, there are cues that can indicate vulnerability. Some clients may disclose this through a direct statement, such as:

• "I can’t hear well on the phone." 
• "I’ve been unwell or in the hospital." 
• "I lost my job." 
• "My eyesight is poor." 
• "I've just gone through a divorce." 

Or your clients may be more subtle with a statement such as:   

• "I have a lot going on right now." 
• "Someone usually helps me with this." 
• "I don't know where to start. I’m not very good with numbers." 
• "Could you provide a printed copy? I prefer not to use computers." 
• "Can you speak to my family member instead?" 

Remember - Vulnerabilities can be disclosed through any communication, including letters or emails. It’s important to look out for these cues even when dealing with ‘admin’ tasks.

The FCA's BRUCE framework can help identify potential vulnerabilities

• Behaviour - Do you notice any cues in your client's speech and behaviour? Do they have difficulty speaking clearly, repeat themselves, or show signs of becoming easily agitated?
• Remembering - Are there any signs that the client may have memory or recall issues? Do they take long pauses before responding, avoid answering questions directly, or try to change the subject?
• Understanding - Are there any signs that the client is having difficulty understanding the information? Watch out for signs like confusion in their responses, excessive agreement, or saying yes when it doesn't seem right.
• Communication - Can the client express their thoughts, decisions, and questions clearly? Do they need a third party to assist with communication?
• Evaluation - Is the client having trouble weighing up all the information? Are they evaluating the advantages and disadvantages of each option? Are they overly dependent on one source of information?

Supporting vulnerability

Clients who are vulnerable might find it harder to make good decisions. It's important that every client gets the best possible outcome, even if that means giving additional support.

Ways you can help

If you think a client has a vulnerability, be patient and understanding. They might not want to talk about it or even recognise they need extra help. Whatever the situation, the goal is to understand how they can be supported.

Here are some ways you can help:

• Explaining information simply
  
  • Use plain language and avoid jargon. Break down complex things into easy-to-understand steps.
  • Use examples or analogies to explain and make information easier to understand. 
• Providing options 
  
  • Be willing to adapt to the client's needs and preferences where possible. Give customers options, such as face-to-face and over-the-phone appointments. 
  • Consider different ways to communicate. For example, if the client has difficulty with phone calls, offer in-person or written communication. 
• Summarising key points
  
  • Regularly summarise the key points throughout the conversation. 
  • Ask the customer to explain the information in their own words.  
  • Offer to provide written summaries of important information for the customer to refer to later. 
• Listening and communicating clearly 
  
  • Adjust your style to suit the customer. Speak clearly and simply, avoiding too much information at once. 
  • Ask open questions like "how do you feel about that?" to encourage them to share their thoughts.

Mortgages can be confusing for anyone, given the jargon, acronyms, and level of financial information. By taking the time to understand your clients and explaining things simply, everyone can have a better experience.