According to the regulator, typically vulnerable consumers are those with poor literacy skills, those who have caring responsibilities, people with disabilities, dementia or the old. Most of the problems in dealing with this client subset relate to poor communication with customers overwhelmed by complex information.
So how do brokers deal with vulnerable customers and how can their experience be improved?
We asked a panel of experts for examples of when they had dealt with a vulnerable customer, in what way was the client considered vulnerable, and the outcome of the case.
Colin Payne, associate director at Chapelgate Associates, talks about his experience with a client who had suffered a brain injury and how with an in-depth knowledge of the special processes in place for vulnerable clients he was able to provide advice.
Dean Mason, practice principal at Masons Financial Planning, provides an example of how blindly following compliance rules and definitions of vulnerability can damage relationships of trust with your clients.
Simon Chalk, technical manager equity release, Age Partnership shares his experience of a client who had reached crisis point in their life and needed protecting from themselves.
Colin Payne is associate director at Chapelgate Associates
We have a specific plan in place for dealing with vulnerable clients which in our view includes: the elderly, those without full mental capacity, not fluent in English, partially sighted, blind, hearing difficulties and those going through or recovering from a serious illness.
We offer clients the option to have a third party present in discussion if we think this will help.
I made contact with clients in the run up to their existing fixed rate expiring and discovered one half of the couple had suffered a traumatic brain injury the previous year and was still hospitalised.
I was shocked and concerned and also wanted to save them money when the current rate expired.
I looked through their file to ensure I had emphasised the need for protection; I had, resulting in the clients emailing me to decline any advice.
Given they had no protection in place I contacted the existing lender. I knew I had no chance of going through the remortgage process and was told by the lender that both borrowers would need to sign the terms and conditions and without sounding callous, how was I going to provide the advice?
I explained I was providing the advice under a ‘special care arrangement’ and the lender’s representative had to check this was acceptable. The end result was the clients were able to switch rates and save money, which certainly helped ease the financial burden.
This example underlines that procedures are indeed in place but also that more training is required to ensure that staff are aware what process needs to be followed.
Dean Mason is practice principal at Masons Financial Planning
A few years back I had an enquiry from a client who clearly knew what he was doing as he explained the new property he wanted to purchase would ultimately be for his goddaughter. As a retired high-ranking civil servant he had a retirement income many would be delighted to have in employment and all other criteria stacked up.
I explained to him that as he was 84 he was deemed vulnerable and should have a chaperone at the meeting.
After he stopped laughing he suggested his goddaughter should attend.
When I visited his home, he was alone and told me his goddaughter would not be attending, however, he was more than happy to proceed. I advised him I would need to call my then network to confirm this was compliant. The network asked me to leave his house while they called him on his landline, I waited in the car.
In time he came to the door and called me back in, now a little confused. Someone he’d never met from a company he’d never heard of 200 miles away with no knowledge of financial advice had basically, in his words, tried to undermine the trust we’d built between us. He decided he still wanted to proceed and we arranged the mortgage with Halifax which he still had when we last spoke last year.
Under MMR of course this would now never work and he would be forced into an equity release, which in this case, would not have been the best advice.
Simon Chalk is technical manager equity release, Age Partnership
In my many years of experience in working with older clients I have found that the vast majority are rational, responsible adults making clear decisions about accessing their housing wealth.
But that hasn’t always been the case as some individuals present greater challenges due to their potential susceptibility to making poor decisions or suffering duress from others; making them do things that ordinarily they would not wish to do.
The regulator and financial services industry alike, brands this cohort as being ‘vulnerable,’ often making the mistake of applying the tag to anyone of a certain age. Whilst it may be true that much older people may be at greater risk of vulnerability, it can equally apply to someone at any age.
I visited a chap at his request to discuss raising a maximum cash sum from his property. I waited a full minute of repeated door-knocking before being greeted by a man in his early 60s but looking like he was 10 to 15 years older. Although it was midday and he was dressed (shabbily) he stunk of stale booze and looked as though he’d just been woken by me and was very confused by my presence. The inside of his home was in a shocking state, with dirty crockery and papers littering every available surface.
What was his reason for wanting to raise the maximum sum? He was evasive on this point. He just knew that he wanted the most amount of money he could get without having to sell up and move out. I glanced at his shiny new PC and huge flat screen monitor, which was displaying an online gambling site. His wife had died a few years previous he explained. I was staring at a man who evidently had completely ‘gone to pot’, being unable to wash and tidy himself, look after his home and vehicles, yet had a smart new computer hooked into gambling whatever he could lay his hands on.
I respectfully told him that I wouldn’t be able to arrange equity release until his home was in tip top condition and that he should invite a second visit once his property was presentable. Of course I was using poetic licence as I could have placed with a lender and the property would have been valued accordingly. But I was not prepared to help the man destroy what little dignity he had left. I was being cruel to be kind, hoping that he would sort himself and his home out, finding good use for the money I could release another time.
So I took the moral high ground, knowing that some might argue that was not my privilege. But I’m not an order-taker and have only conducted business whenever I have felt comfortable with the client, as I always hoped they did me.
