Looking out for vulnerable customers

The FCA will soon finalise their guidance on how firms should support vulnerable customers, so it’s important you understand how you can support your clients, says Sarah Green, Director of Intermediary Mortgages at Virgin Money.

Who are vulnerable customers?

According to the FCA, a vulnerable customer is anyone who, due to their personal circumstances, could be susceptible to detriment, exploitation, or harm – particularly when firms don’t act with an appropriate level of care.

For example, the elderly, the ill and bereaved, or anyone who finds themselves in a difficult situation for a range of reasons. Or it may not be something that’s happened to them – someone may be vulnerable simply because of how confident they feel with reading, understanding, or managing money.

It’s important to remember that we should help people facing vulnerability now, but also those who may potentially face detriment in the future.

Put simply, wherever we see an opportunity to prevent harm, or make it easier for someone to understand or manage their mortgage, we should do so.

There are four main categories of vulnerability.

Health vulnerabilities

Some clients have health problems that could affect the way they engage with us, or make decisions. Look for signs of visual or hearing impairments, mental health problems or perhaps a long-term illness.

Life event vulnerabilities

Life events can have a huge impact on a client’s ability to make good decisions or pay their mortgage.

These include bereavement, caring responsibilities, or a relationship breakdown, as well as changes to their income.

Perhaps your client has individual circumstances that could make it harder for them to apply for a mortgage – such as having left care, they’re a refugee, or an ex-offender.

Resilience vulnerabilities

Look out for clients with a lack of financial or emotional resilience.

Those with high debt levels or unstable income might be easy to spot, but also look out for clients who lack a support network of family or friends. With the right help, there’s no reason these clients can’t manage a mortgage – knowing you’re there to support them could make all the difference.

Capability vulnerabilities

Consider a client’s capability to engage with their finances.

Do they display poor knowledge of financial matters or an inability to manage money?

Perhaps they have poor literacy, numeracy, or English language skills. This could impair their ability to understand mortgages, and could make them vulnerable to fraud.

Possible signs of problems include repetition or confusion, or even signs of agitation. That’s why we should always be curious about a customer’s needs and ask how we can make it easier for them to understand and make a decision they’re happy with.

It’s a long list and some risk factors are easier to spot than others. But if you suspect your client is potentially vulnerable, what should you do?

How you can help

  • Check they are comfortable discussing their situation with you and find out how they would prefer to communicate.
  • Maybe a face to face meeting would be best if they don’t have digital skills for example, while others will be more comfortable chatting on the phone from their own home.
  • Ask open questions to get a better understanding of their situation. The FCA guidance is clear that we don’t need to ‘diagnose’ vulnerability, but rather, we need to give customers the space to share insights on the support they need.
  • Make sure your client understands what you are telling them and repeat as needed.
  • Always avoid jargon where possible, and communicate complex ideas clearly.
  • Be understanding, patient and sensitive to their situation. And, don’t make assumptions, as that could mean you offer help that’s irrelevant or inappropriate.
  • Gain their consent if you write down any details of their circumstances. It’s important from a GDPR perspective that they know what you’re recording and why.
  • At the end of your meeting, summarise what’s been discussed, double check it makes sense to your client and that they’re happy with the next steps.

Where to find more information

If you think a client would benefit from further support be sure to signpost them to the relevant help.

Depending on their needs, some vulnerable customers can be supported by Citizens Advice Bureau, Age UK or Age Scotland or adult social services.

Charities such as Step Change, Macmillan Cancer Support, the Samaritans, and Scope could also be helpful, depending on their needs.

Your clients need you

We know this is a challenging time for brokers. And many of your clients face financial and emotional challenges.

You’re already the expert at helping your clients find the right mortgage for their needs. Now make sure you’re equally confident you can recognise vulnerable clients and support them.

Virgin Money is passionate about supporting intermediary partners and their clients. For more useful insight check out our website or talk to your Business Development Manager.

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Date published: 09/11/2020