How Are Vulnerable Customers Identified?
The Financial Conduct Authority regulates the UK financial market – which includes automotive dealerships.
One of the key principles of the Financial Conduct Authority, also referred to as the FCA, is the protection of consumers through fair treatment (treating customers fairly, or, FCA TCF). Treating customers fairly involves access to clear information and unbiased advice, products which meet the expectations set by the firm, and the ability to change products or providers and make a complaint.
The fair treatment of customers extends to vulnerable customers in regulated markets. For FCA regulated markets, the fair treatment of vulnerable customers necessitates additional steps, requiring staff to be trained in identifying characteristics of vulnerability; they should then modify their practices to meet the needs of the customer where appropriate.
What Is a Vulnerable Customer?
The FCA defines a vulnerable customer as someone who “due to their personal circumstances, is especially susceptible to harm”.
Characteristics of vulnerability may be both physical and imperceptible. They can include health and cognitive impairment, life events, low capability, and low resilience to financial and emotional shocks.
The FCA considers vulnerability as a spectrum of risk, meaning their interest in a customer’s vulnerability stems from being able to properly protect that customer from financial risk.
Identifying Vulnerable Customers
Vulnerability can often go undetected. For firms regulated by the FCA, it is essential when meeting FCA compliance that where there are characteristics of vulnerability, staff are able to identify them and take the appropriate measures to meet the needs of the customer.
Physical Signs of a Vulnerable Customer
Vulnerability may be detected through physical indications. According to the FCA website, physical signs of a vulnerable customer may include:
- Shortness of breath
- Agitation
- Requiring speech to be repeated
- Confusion
- Disclosing the use of medication
When a physical characteristic of vulnerability has been identified, staff should take further steps to identify how their needs may be affected by their vulnerability in order to provide fair treatment of vulnerable customers in regulated markets. However, not all customers are willing to share this or elaborate on their vulnerability – this boundary must be respected.
Imperceptible Signs of a Vulnerable Customer
Some signs of vulnerability may not be visible. In this case, the FCA advises staff may be alerted to a customer’s vulnerability through signs such as:
- A change in payment patterns
- Regular unarranged overdrafts and charges
- Unusual account activity
- Phrases which indicate vulnerability, for example “I can’t pay” or “I can’t read my bill”
A customer may choose to disclose an imperceptible vulnerability, in which case staff must listen empathetically and provide the appropriate support.
Again, staff must be proactive in learning how a customer’s needs are affected by their vulnerability, but must not pressure a customer into disclosing this information.
How To Support Vulnerable Customers
Supporting vulnerable customers requires:
- Empathy
- Active listening
- Tailored assistance (to address their unique needs effectively)
When you or your team is helping vulnerable customers, it's important to be patient, understanding, and ready to listen with care. Show that you care by recognising their emotions and worries, and make sure they feel comfortable sharing their thoughts openly in a safe environment.
Avoid rushing interactions and take the time to understand their specific needs and preferences. Use clear and simple language, avoiding jargon or complex terms that may confuse or overwhelm them further.
Actions Principal Firms Can Take To Protect Vulnerable Customers
Principal firms are there to ensure the appointed representatives in their networks adhere to FCA compliance, including the fair treatment of vulnerable customers.
They ensure fair treatment of vulnerable customers through the regular surveillance and monitoring of firms, making certain firms are equipped to identify and support vulnerable customers, and staff are trained in working with vulnerable customers.
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