The FCA’s guidance includes 4 key drivers of customer vulnerability:
Conditions or illnesses that affect one’s ability to complete day-to-day tasks, both mentally and physically.
Such as bereavement, job loss or relationship breakdown.
Low ability to withstand and manage financial or emotional shocks.
Limited knowledge of financial matters, lack of technological savviness or poor ability in areas such as digital communications and language skills.
Vulnerable customers policy
Each firm should define specific characteristics of a vulnerability that appear more commonly within their customer base and target market. For instance, financial advisory firms that work with pensions and investments may come across customers with vulnerabilities involving health or life events associated with old age.
Some characteristics of vulnerability are common across various customer segments and age groups. They can appear at any moment of time and overlap with or cause other vulnerability drivers. An example can be life events related to a loss of a partner, or interruption of the regular income. They can be coupled with digital illiteracy and lead to mental health issues like depression.