Vulnerable Customers
Anyone can become vulnerable.
For example, this may happen because of poor health, money worries or a major life event.
In addition, some people may find financial decisions harder because they have less confidence, less experience or difficulty understanding complex information.
Therefore, financial firms need to recognise that customers do not all have the same needs.
The FCA expects firms to identify possible vulnerability and offer suitable support.
In simple terms:
A vulnerable customer may be more likely to suffer harm if a firm does not respond properly to their needs.
For mortgage advisers, this means understanding the person as well as the mortgage.
What Is a Vulnerable Customer?
A vulnerable customer is someone who may be more likely to suffer harm because of their personal circumstances.
However, this does not mean they are unable to make decisions.
Instead, it means they may need extra care, more support or a different approach.
Therefore:
Vulnerability is about risk of harm, not lack of ability.
This is an important distinction.
Vulnerability Can Affect Anyone
It is easy to think that vulnerability only affects a small group of people.
However, that is not true.
For example, someone may become vulnerable after:
- losing a job
- becoming seriously ill
- losing a partner
- going through a divorce
- facing a large financial shock
Therefore, vulnerability can appear suddenly.
In addition, it may be temporary or long term.
Vulnerability Does Not Mean Inability
A person may be vulnerable and still understand financial information well.
For example, someone may have:
- a physical disability
- a long-term illness
- a recent bereavement
However, they may still be fully able to understand and choose a mortgage.
Therefore:
Do not assume that vulnerability means lack of capacity.
Instead, focus on the support the customer actually needs.
Do Not Make Assumptions
Advisers should avoid guessing based on age, disability or appearance.
For example, an older customer should not automatically be treated as confused.
Likewise, a younger customer should not automatically be assumed to understand online systems.
Therefore, it is better to ask:
What would help you most?
This keeps the customer involved.
The Four Drivers of Vulnerability
The FCA groups vulnerability into four main areas.
These are:
- Health
- Life Events
- Resilience
- Capability
A simple way to remember them is:
Health → Life Events → Resilience → Capability
Now, let’s look at each one.
Driver 1: Health
Health can affect how a customer uses financial services.
For example, this may include:
- physical illness
- disability
- mental health difficulties
- hearing loss
- sight loss
- memory problems
However, the condition itself is not the main point.
Instead, the key question is:
How does this affect the customer’s ability to use the service?
Therefore, the adviser should focus on the practical effect.
A Health Example
Imagine a customer has serious hearing loss.
They understand mortgages well.
However, phone calls are difficult.
Therefore, the firm may need to use another suitable way to communicate.
As a result, the barrier is reduced without taking control away from the customer.
Driver 2: Life Events
Major life events can also create vulnerability.
For example:
- bereavement
- relationship breakdown
- job loss
- retirement
- becoming a carer
- domestic abuse
These events can affect both finances and decision-making.
Therefore, a customer may need more time or support.
A Bereavement Example
Imagine a customer has recently lost their spouse.
Their partner had always dealt with the mortgage.
As a result, the customer may feel unsure about what to do next.
Therefore, the adviser may need to:
- slow down
- explain clearly
- allow extra time
- avoid pressure
In this case, the support responds to the life event.
Driver 3: Resilience
Resilience means how well someone can cope with a financial or emotional shock.
For example, a customer may have:
- very little savings
- unstable income
- high debts
- limited support
- little spare money
Therefore, even a small cost could create difficulty.
A Resilience Example
Imagine two customers both face a £500 emergency cost.
Customer A has £20,000 in savings.
Meanwhile, Customer B has almost no money left until payday.
The same £500 cost affects them very differently.
Therefore, financial resilience can change how serious a problem becomes.
Driver 4: Capability
Capability relates to how well someone can understand and manage financial matters.
For example, a customer may have:
- little financial knowledge
- poor reading skills
- difficulty with numbers
- low digital confidence
- difficulty understanding complex terms
Therefore, the adviser may need to change the way they explain things.
A Capability Example
Imagine a first-time buyer does not understand the term LTV.
Simply saying:
Your LTV is 90%.
may not help.
Instead, the adviser could explain:
You are borrowing 90% of the property’s value.
Therefore, simpler language can improve understanding.
More Than One Driver Can Apply
A customer may be affected by more than one type of vulnerability.
For example:
Job loss
↓
Life event
Little savings
↓
Low resilience
Stress and confusion
↓
Capability concern
Therefore, vulnerability can be mixed and change over time.
Vulnerability Can Be Temporary
Some difficulties last only for a short period.
For example:
- bereavement
- redundancy
- an accident
- a relationship breakdown
Later, the customer’s circumstances may improve.
Therefore, firms should avoid treating one difficult period as a permanent label.
Vulnerability Can Be Long Term
Other needs may last for much longer.
For example, a customer may have a permanent disability.
However, even then, their support needs may change.
Therefore:
Focus on what the customer needs now.
This is more useful than focusing only on a label.
How Might an Adviser Notice Vulnerability?
Sometimes the customer will explain their situation clearly.
For example:
I lost my job last month.
However, at other times, the signs may be less obvious.
For example, the adviser may notice:
- repeated confusion
- visible distress
- difficulty understanding
- trouble communicating
- sudden money problems
- mention of a major life event
Therefore, listening carefully matters.
Listen to What the Customer Says
Important information often appears in ordinary conversation.
For example:
My husband used to deal with all the finances. He died recently.
This may tell the adviser that the customer:
- is recently bereaved
- may be less familiar with the mortgage
- may need more time
Therefore, the adviser should respond to the situation rather than ignore it.
Do Not Diagnose Customers
Mortgage advisers are not doctors.
Therefore, they should not try to diagnose:
- mental illness
- dementia
- learning disability
- other medical conditions
Instead, focus on practical questions.
For example:
Is the customer finding this difficult to understand?
or:
Would another way of explaining this help?
This keeps the adviser within their role.
Ask What Would Help
Where appropriate, advisers can ask simple support questions.
For example:
Would you like me to go through that more slowly?
or:
Would written information help?
Therefore, the customer can help decide what support works best.
This also avoids unnecessary assumptions.
Communication May Need to Change
A standard approach will not work for everyone.
Therefore, possible adjustments may include:
- simpler language
- larger text
- more time
- written information
- breaks
- a different contact method
However, the right adjustment depends on the individual.
So:
Adapt the service, not the customer’s rights.
Give Customers Enough Time
Some customers may need longer to understand or decide.
Therefore, advisers should avoid unnecessary pressure.
For example, saying:
You need to decide right now.
could be unfair if there is no real reason for urgency.
Instead, give the customer a fair chance to understand the choice.
Vulnerability and Consumer Understanding
This links directly with Consumer Duty.
Remember the Consumer Understanding outcome.
Customers should receive information they can understand.
Therefore, if a customer needs a different explanation or format, the firm should consider it.
As a result:
Clear communication may look different for different customers.
Vulnerability and Consumer Support
Consumer Duty also includes the Consumer Support outcome.
Therefore, customers should be able to get help without unreasonable barriers.
For example, a customer who struggles with online forms may need another way to contact the firm.
As a result, support should be flexible where possible.
Digital Exclusion
Many financial services are now online.
However, not everyone can use digital systems easily.
For example, some customers may have:
- no internet access
- low digital confidence
- sight problems
- difficulty using online forms
Therefore, digital systems can sometimes create barriers.
Firms should consider how those barriers can be reduced.
Third-Party Support
Sometimes a customer may want another person to help them.
For example:
- a family member
- friend
- carer
- advocate
This can be useful.
However, the firm still needs to consider:
- consent
- confidentiality
- data protection
- possible pressure from the third party
Therefore, third-party support should be handled carefully.
Keep the Customer Involved
Imagine a customer’s daughter attends the mortgage meeting.
She answers every question.
However, the mortgage belongs to the customer.
Therefore, the adviser should still speak directly to the customer where possible.
As a result, the customer stays involved in their own decision.
Watch for Undue Influence
Sometimes another person may put pressure on the customer.
This is known as undue influence.
For example, someone may pressure a customer to:
- borrow money
- release equity
- transfer property
- guarantee borrowing
Therefore, advisers should remain alert when another person appears to control the discussion.
A Simple Undue Influence Example
Imagine an older customer wants to borrow £50,000.
Their son answers every question.
He then says:
Mum doesn’t need to know the details. Just get it done.
That should raise concern.
Therefore, the adviser may need to follow the firm’s process and speak with the customer separately.
Financial Abuse
Financial abuse can also create vulnerability.
For example, someone may:
- control another person’s money
- steal savings
- force borrowing
- misuse an account
- pressure someone to transfer property
Therefore, warning signs should not be ignored.
However, the adviser should follow firm procedures rather than investigate alone.
Mental Capacity
Vulnerability and mental capacity are different.
A customer may be vulnerable but still have full capacity.
Likewise, capacity can depend on the decision and the time.
Therefore:
Never assume lack of capacity simply because someone is vulnerable.
This is especially important in financial advice.
Support Without Taking Over
Good support should help the customer stay in control.
For example, the adviser may:
- explain more clearly
- slow the conversation
- allow more time
- change the communication method
However, where the customer has capacity, they should still make their own decision.
Therefore:
Support the customer rather than take over.
Recording Support Needs
Where appropriate, firms may record useful support information.
For example:
Customer prefers written communication because phone calls are difficult.
This may help the customer avoid repeating the same information later.
However, personal information must be handled carefully.
We will cover data protection on Page 25.
Keep Records Useful and Respectful
The purpose of recording support needs is to help the customer.
Therefore, notes should be:
- relevant
- accurate
- respectful
- useful
For example:
Customer needs more time to consider complex information
is better than making unnecessary assumptions.
Staff Need Suitable Training
Employees need enough training to recognise and respond to vulnerability.
For example, training may cover:
- support needs
- clear communication
- sensitive information
- warning signs
- escalation
However, staff do not need to become medical experts.
Instead, they need to know how to respond properly.
Firms Need Good Systems Too
Vulnerability is not only the adviser’s responsibility.
The firm also needs suitable systems.
For example:
Can customers contact the firm easily?
Can information be provided in different ways?
Do staff know what to do?
Can support needs be recorded safely?
Therefore, good outcomes need both good advisers and good systems.
Monitor Outcomes
Firms should also check whether vulnerable customers receive suitable outcomes.
For example, they may look at:
- complaints
- support requests
- feedback
- problems using services
If the same issue appears repeatedly, the firm may need to change its process.
Therefore:
Good support should be tested in practice.
A Full Mortgage Example
Imagine David wants to remortgage.
During the meeting, he says:
My wife died recently. She always dealt with the mortgage.
The adviser should not assume David cannot make decisions.
Instead, they could:
Recognise the life event
↓
Ask what support would help
↓
Use simple language
↓
Allow more time
↓
Check understanding
↓
Record relevant support needs
Therefore, David remains in control while receiving suitable support.
A Simple Adviser Process
When vulnerability may be present, use this simple approach:
Listen
Hear what the customer is saying.
↓
Recognise
Notice possible support needs.
↓
Ask
Find out what would help.
↓
Adapt
Change the approach where needed.
↓
Support
Help the customer understand and decide.
↓
Record
Keep useful notes where appropriate.
↓
Review
Remember that needs can change.
This provides a clear structure.
What Should an Adviser Avoid?
An adviser should avoid:
- making assumptions
- using unnecessary jargon
- rushing customers
- ignoring obvious difficulty
- speaking only to relatives
- taking control away without reason
Therefore, the aim is not to treat vulnerable customers as less capable.
Instead, the aim is to remove barriers.
A Simple Memory Aid
Remember the four drivers:
Health
↓
Life Events
↓
Resilience
↓
Capability
Then remember the response:
Listen
↓
Recognise
↓
Adapt
↓
Support
This gives you a simple way to think through vulnerability questions.
Key Terms to Remember
Vulnerable Customer
A customer who may be more likely to suffer harm because of their personal circumstances.
Health
A driver of vulnerability linked to physical or mental health.
Life Events
Major changes such as bereavement, job loss or relationship breakdown.
Resilience
A person’s ability to cope with financial or emotional shocks.
Capability
A person’s ability to understand and manage financial matters.
Reasonable Adjustment
A suitable change that helps remove a barrier.
Undue Influence
Improper pressure from another person.
Financial Abuse
Improper control or misuse of another person’s money.
Mental Capacity
A person’s ability to make a particular decision.
Quick Knowledge Check
1. What is a vulnerable customer?
A customer who may be more likely to suffer harm because of their personal circumstances.
2. What are the four drivers of vulnerability?
Health, life events, resilience and capability.
3. Can vulnerability be temporary?
Yes. It may be temporary, long term or change over time.
4. Does vulnerability automatically mean lack of capacity?
No. Vulnerability and mental capacity are different.
5. Should advisers diagnose medical conditions?
No. They should focus on practical support needs.
6. Should all vulnerable customers receive the same support?
No. Support should reflect the individual customer.
7. Can another person support the customer?
Yes, where appropriate, although consent, confidentiality and possible pressure should be considered.
8. What is undue influence?
Improper pressure from another person that affects the customer’s decision.
9. Why might support needs be recorded?
So the firm can provide suitable and consistent help.
10. What should remain central?
The customer’s needs, dignity, understanding and control over their own decisions.
Quick Summary
Vulnerability can affect anyone.
It may happen because of:
Health
↓
Life Events
↓
Low Resilience
↓
Limited Capability
However, vulnerability does not automatically mean a customer cannot make decisions.
Therefore:
Do not assume.
Instead:
Listen
↓
Recognise
↓
Ask
↓
Adapt
↓
Support
Most importantly, keep the customer involved.
Good support should remove barriers without taking away choice or control.
For mortgage advisers, the key lesson is simple:
Understand the customer, not just the mortgage application.
Next Page
Complaints and Compensation