Sharing her latest thoughts with IFA Magazine, Katie Brinsden, Managing Director of Truly Independent, explores why identifying and supporting vulnerable clients demands far more than a compliance exercise. She argues that genuine empathy, trusted relationships and meaningful conversations are essential if advisers are to deliver the good outcomes Consumer Duty expects.
Here is a question for you – and, as ever, it is not of the trick variety. In the eyes of the financial services industry, what unites someone who has an addiction, someone who suffers from fatigue, someone who has been through a painful break-up and someone who lacks “consumer confidence”?
As I am sure you know, the answer is that they all might be deemed “vulnerable”. So, too, might someone who is bankrupt, someone who is a carer, someone whose working hours have been reduced, someone who cannot cover their living expenses… and many more besides.
It is now more than five years since the Financial Conduct Authority (FCA) finalised its guidance on the fair treatment of vulnerable clients[1]. We might think there has been ample time to get to grips with the various ins and outs, irrespective of how fuzzy some of them may seem.
Now, though, the pressure to achieve the right results is steadily mounting. Earlier this year, framing the issue through the lens of Consumer Duty, the FCA announced it would be contacting firms in a bid to better understand some of the steps being taken[2].
While this should not necessarily fill us with dread, it seems reasonable to suggest now is as good a time as any to reflect on whether efforts to produce optimum outcomes for vulnerable clients are truly effective. In many instances, unfortunately, they may not be.
Broad-brush box-ticking versus trust and meaningful dialogue
One of the fundamental challenges is that many people are inherently reluctant to discuss their vulnerabilities in the first place. The fact that awareness of their problems might be go a long way towards shaping the service they receive from the adviser community is neither here nor there. Human nature dictates that they remain reticent.
Consider a client who has recently been through a divorce. How much is she prepared to divulge in informing an adviser of this dramatic change in her circumstances? She might declare that she genuinely feels everything is wonderful and that she is relishing what lies ahead after the end of an unhappy period in her life. She might pretend all is well when this is very much not the case. She might admit she is utterly distraught and has no idea where to turn.
Since advisers are neither trained interrogators nor qualified psychoanalysts, getting to the truth may be a challenge in itself. The temptation could be to rely on broad-brush interactions that produce generalised and potentially inaccurate conclusions – which, in turn, are unlikely to fully satisfy the exacting requirements of Consumer Duty.
By way of further illustration, how often might an adviser near-instantly infer that an elderly client is vulnerable solely on the grounds of old age? Equally, how often might an adviser near-instantly infer that a young client is vulnerable solely on the grounds of what the FCA labels “limited knowledge of financial matters”[3]?
The reality is that multiple nuances are likely to be at play. This underlines both the value of adviser-client relationships that are deeply rooted in trust and meaningful dialogue and, by stark contrast, the utter inadequacy of cursory exercises in box-ticking.
Putting ourselves in a client’s place
Interestingly, the FCA wants to see processes that place “people, not paperwork, at their centre”. Although I would argue that paperwork actually has a major role to play in recording every salient detail, thereby helping ensure both that informed decisions are reached and that comprehensive compliance is demonstrated, such an approach undoubtedly represents a noble goal.
Above all, what we might usefully bear in mind in striving for this ideal is how we would hope to be treated ourselves if we were placed in a vulnerable situation. Alternatively, we might wonder how we would hope our nearest and dearest would be treated.
The chances are that we would expect empathy, patience, compassion and insight. We would also expect an effective solution that is tailored to meet unique needs and preferences – not least from a profession that habitually portrays itself as an expert provider of the very same.
This demands significantly more than snap judgements based almost entirely on first impressions. It demands significantly more than determining almost every vulnerability can be accommodated via inviting relatives or friends to “ride shotgun” at client meetings.
It also demands significantly more than lazily awaiting another round of guidance from the regulator. In this context, as in so many others, we should not forget that advisers still have the ability to shape both their own destinies and those of their clients – and, in so doing, to fulfil our industry’s underlying purpose of improving as many lives as possible.
[1] See Financial Conduct Authority: Guidance for Firms on the Fair Treatment of Vulnerable Customers, February 2021
[2] See, for example, Financial Conduct Authority: “FCA reviews whether investment firms are doing enough to support bereaved customers”, May 13 2026
[3] See, for example, Financial Conduct Authority: Financial Lives 2022 Survey
