Topic 15: Customer vulnerability

Question 1

What is the definition of a ‘vulnerable customer’?

Answer 1

Someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.

Question 2

What are the 3 main strands causing vulnerability?

Answer 2

1) Individual factors (health, life events, resilience, capability)
2) Wider circumstances (e.g. over-indebtedness, lack of financial awareness/confidence, lack of savings)
3) Organisational action (or inaction)

Question 3

What can someone do if they are deemed incapable of making decisions due to their mental health?

Answer 3

Appoint an agent (or someone can be appointed for them) to undertake tasks on their behalf. A lasting power of attorney (LPA) can be set up that will enable a 3rd party to act on behalf of the customer and deal with their financial affairs.

Question 4

What is the Lending Standards Board (LSB)?

Answer 4

The LSB operates independently of the FS industry and monitors and enforces lending and credit standards, including those governing the treatment of vulnerable customers in financial difficulty.

It has established standards of lending practice (SLP) to which registered firms must adhere. They are voluntary, representing best practice for lenders, particularly when dealing with vulnerable customers.

Question 5

What are the 3 traffic light classifications of vulnerability?

Answer 5

1) Green - potentially vulnerable
2) Amber - vulnerable
3) Red - particularly vulnerable

Question 6

What is the TEXAS protocol for managing the disclosure of a vulnerable situation?

Answer 6

Thank the customer for sharing the information
Explain how the info will be used/ shared
(E)xplicit consent must be obtained
Ask the customer key questions to better understand
Signpost the customer to internal/ external help

Question 7

What is the CARERS protocol for managing carer disclosure?

Answer 7

Check for authority
Avoid discussing any account details
Reassure carer their concerns will be noted
Explain their concerns to be shared w/ customer, etc.
Record carers’ observations carefully
Summarise next steps

Question 8

What is the IDEA compass point in relation to vulnerable situations?

Answer 8

Impact
Duration
Experiences
Assistance