The 10-point list is expected to help firms assess their processes for detecting vulnerabilities in clients.
It covers all customers and vulnerabilities, including provision for protected characteristics, such as age, gender and sexual orientation. It also assesses how well firms are responding to monitoring and reporting requirements.
The Financial Conduct Authority (FCA) has asked firms to prepare their board reports for July.
10-point checklist
- Do you have easy-to-access processes to allow customers to disclose vulnerabilities?
- Are you assessing for all vulnerabilities – health and life events – as well as financial wealth?
- Are you attempting to proactively assess all customers, not a subset (such as those who phone in, claim or default)?
- Do you wait for customers to volunteer that they are vulnerable or self-identify a vulnerability? (We have found that this reveals only a small proportion of the vulnerable population)
- Are your advisers/agents assessing vulnerability? (We have found that these can often under-report so, if this method is used, then it needs extensive training and monitoring)
- Are you recording those with protected characteristics to ensure they receive equitable outcomes, in accordance with the Equality Act?
- Are you monitoring changes in vulnerabilities over the lifetime of a product? (This may be the distributor, the manufacturer or both. Hoping that the other is doing this isn’t going to cut it)
- Can you evidence how you act on identified vulnerabilities – for example, changing how you communicate, or amend your processes?
- Can you give evidence of all the above – using good-quality, consistent data?
- Will you be able to report, for July, on the outcomes received by vulnerable cohorts at board level (bereaved, divorced, those in debt, those with a life-limiting illness and so on) compared to the resilient?
Andrew Gething, managing director of MorganAsh, said: “Many firms are now realising that managing consumer vulnerability is trickier than they first thought – with assessments by individuals delivering inconsistent results and hence difficulty in providing good data for reporting. The checklist focuses on the common areas of weakness we have been discussing with the FCA, and we expect to be high on their agenda with this review now underway.
“In practice, few firms meet all the above requirements, especially when it comes to reporting and monitoring. We recommend having plans in place to demonstrate progress and intent – as there is little excuse to be not assessing customers when interacting with them at point of sale or during annual reviews.
“It quickly becomes clear that good data and a clear process are essential in meeting the requirements of Consumer Duty. Vulnerability management software – such as MARS – is fundamental in making this easier for firms, all while keeping costs down and driving better client relationships.”
MorganAsh launched its MARS platform to help firms understand and monitor vulnerable customers and deliver good outcomes. It helps firms to have a consistent way of identifying vulnerabilities and produces a resilience rating, similar to a credit score, which shows how resilient a client may be to possible eventualities.
