Last month the FCA commenced an enforcement investigation into a debt-management firm refusing to help an 87-year-old widow on a 95-year debt management plan.
The UK’s financial watchdog also found another firm collecting unaffordable payments from a vulnerable customer for six months, despite having been told that the customer was struggling financially and had had to give up work after being diagnosed with cancer.
Given the growing emphasis on this cohort, this week Mortgage Solutions asked our panel how brokers can support vulnerable clients.
We all appreciate the fact that mortgage advice is beneficial for all types of borrower, helping them navigate what can be a maze of different products and criteria.
That is true for those that would deem themselves more than capable of managing their finances but is only likely to be even more important for vulnerable customers.
However dealing with vulnerable customers appropriately is something that the regulator has made a clear priority for firms and so it is important to think about how you can deal with those situations.
We have sought to develop an internal policy that not only lays out the expectations but also helps advisers to identify where they may be dealing with a vulnerable customer.
It is very difficult to cover all the situations that could indicate a customer is vulnerable but asking repeated questions of a similar nature or struggling to understand the information being provided could be possible flags.
The fact that a customer is vulnerable should not necessarily mean that they should not continue to be advised. It is important to ensure continuity, so make it clear to colleagues who may deal with the customer through the advice process that they may be vulnerable.
It is also important not to assume that because a customer may be vulnerable now that they will be in future.
For example, a recently bereaved borrower may be vulnerable at that point in time but at a later date be in a quite different place.
Giving customers additional chances to ask questions and regularly seeking confirmation of understanding can help to ensure that vulnerable customers get the right treatment and result.
Typically our customers are over-55 and it is important that we challenge the misplaced stereotype that being older means that by default you are vulnerable.
However, given the profile of our customer base we are perhaps more acutely aware than advisers operating in other sectors of the market, of the importance of taking vulnerability into account as part of our process.
All colleagues at Key regularly receive specialist training to help them identify vulnerable customers at all stages of the journey and the appropriate action to take.
This can be more challenging than it sounds as vulnerability can stem from a wide-range of factors including financial difficulty, undue influence, cognitive decline and/or emotional distress.
Taking a holistic view to identifying vulnerable customers is vital, as is ensuring that processes and procedures are fully embedded across all areas of the organisation.
Once a customer has been identified as being vulnerable it is essential that advisers and case handlers feel they have the tools and support to help them achieve the right outcome for the customer.
Most of our equity release advice is delivered face-to-face, through two separate appointments conducted in the customer’s own home. This gives customers the best opportunity to involve family in the process, allows us to build empathy and check understanding as well as to spot signs of potential vulnerability.
If a client has been identified as vulnerable, a Key adviser will always be accompanied by a colleague during all of their subsequent interactions with the customer.
This colleague will most likely be one of our specially trained vulnerability champions who can offer expert guidance to ensure the right outcome is achieved.
Fundamentally, the critical thing is to ensure that every customer is treated as an individual and receives quality advice which is appropriate to their situation.
We should not shy away from dealing with vulnerable customers as equity release can offer a life changing solution to some of the challenges that these customers face in later life.
As great brokers know well, they must identify the client as vulnerable and must treat customers as individuals, providing a tailored service.
Our Stonebridge and MoneyQuest Advisers are trained to identify potentially vulnerable customers before advice is given.
For those in financial difficulty, a good broker will painstakingly review customers’ circumstances, providing clear advice. Debt consolidation can change a customer’s life for the better, reducing monthly outgoings and mitigating further financial stress.
Advisers build a relationship of trust with their customers giving them confidence to be completely open about their situation, which helps both customer and broker.
Our business provides an end-to-end case management service. This supports clients from application to completion, holding their hand throughout.
On one occasion, a customer contacted us asking how much he could borrow as he ‘had to’ sell his current family home. He was clearly upset, and after further investigation the adviser discovered that he was recently divorced and felt he had to sell his family home as a result.
He was particularly emotional and the adviser could tell that the customer had not been able to calmly consider all his options and was able to calm him to the point where she could walk him through each of these.
One option which the customer had not believed was open to him, was to keep his current home, taking on the mortgage solely.
She then worked directly with the underwriter to ensure he was fully aware of all the circumstances around this case and the vulnerability of the customer.
As a result, the customer was able to retain his family home and provide stability to his young family at a difficult time.