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A vulnerable customer is someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care. All brokers should have procedures in place to identify and deal with vulnerable customers to ensure all customers are treated fairly.
Under TCF principle 6 and 7, a firm must pay due regard to the interests of its customers and treat them fairly, and they must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading.
Some of the key vulnerability risk factors include:
· Individuals with poor literacy, numeracy and financial know how.
· Physical disability, such as hearing or visual problems
· Mental health illness or other long term illness
· Debt problems
· Customers who need carer or third party involvement
· Poor understanding of English language
Brokers generally have a small role within the life cycle of the product, if a customer for example runs into financial difficulty during the running of the account it would be the lender who would have a need to identify and deal with the matter in a sympathetic and appropriate manner.
Brokers do have to recognise a vulnerable customer so they can ensure the fair treatment at the outset. The following would highlight potential vulnerability:
· Customer with debt problems or recent financial difficulty
· Customers stating they don’t understand documents or confusion with information provided
· Customers asking to repeat the question several times
· Signs of stress and hesitation when speaking to customers
· Any mention of mental health, hearing or other issues
· Contact by a third party/carer
Its not always as simple as meeting one of the above points, an individual may have financial problems, debts etc but not be considered vulnerable, other signs of vulnerability would need to be evident such as poor understanding of finances during discussions.
Putting procedures in place
Brokers should have written procedures in place detailing who they identify and deal with a vulnerable customer. All customers vulnerable or not should receive a high level of service, trust the advice brokers give and have the understanding to make informed decisions when needed.
Some of the main procedures to deal with vulnerable customers include:
Making sure documentation and verbal information on the products we provide is clear and easy to understand. Being careful not to bombard a customer with so much information which leads to confusion but making sure you highlight all features and benefits and more importantly any associated terms, conditions and risks. Ensuring the information provided is jargon free, and providing this information promptly and before any agreement is formed.
Providing customers with various ways of being able to contact you, and making sure some flexibility exists in dealing with the customer, for example a customer may want an unusual appointment to they can have a family member with them for support. Placing no inappropriate restrictions on communication such as highly restricted call times, limited contact options or premium rate numbers.
Giving the customer additional time to digest the information provided, taking the time to listen to the customers concerns and ensure no pressure is applied in making decisions.
If help cannot be provided having procedures for supplying the customer with free support contact details such as the Citizens Advice Bureau or the Money Advice Service.
Ensure customer files are updated with important conversations or points should another advisor have need to deal with the case they are aware of all the facts and the vulnerability so the customer does not have to repeat the points again, and importantly the advisor knows they need to make communication clear and provide more time.
Make additional contact with vulnerable customers to assess understanding and ensure appropriate time has been given or if they have additional questions. Additional meetings or calls to confirm any documentation has been understood and they feel comfortable with the process and what they are being recommended.
The FCA have procedures in dealing with a third party such as a carer. These procedures are:
· Check for authority – if the carer can supply evidence of their authority to act on the customer’s behalf, a more detailed discussion can be arranged once this is received – if the carer cannot supply this evidence, or needs to share information about the customer now, and the following steps should be taken:
· Avoid discussing any account details, making sure to explain to the carer why this isn’t possible
· Reassure the carer that their concerns can still, however, be recorded as observations (unverified) on the customer’s file, and these can be looked into
· Explain to the carer that their observations will need to be shared with the customer, colleagues. Carers will need to give their consent for this.
· Record the carer’s observations, listening carefully, and ensuring: we have checked why the customer is unable to speak directly with us (is there, for example, a communication issue?) – you have confirmed with the carer what information has been recorded, and how long these unverified observations will be held on file while they are being checked.
· Summarise the available next steps, which might include: speaking with the customer concerned to establish if there is a problem, including checking the unverified observations made by the carer – the carer discussing with the customer a potential mandate to act on their behalf – the carer and customer working together to collect supporting medical evidence.