In October 2017, the FCA noted that 50% of British Adults were believed to be financially vulnerable, but what does this actually mean and how does that stand today?
The FCA describe financial vulnerability as “a vulnerable consumer is someone who, due to their personal circumstances is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care”.FCA
It is vitally important to understand that the term ‘financially vulnerable’ does not mean ‘financially poor’. Whilst someone who is a financially vulnerable person may also be poor, a financially vulnerable person is more accurately described as a person who might be impacted by a financial event with no mechanism to manage it.
There can be no doubt that national and global events in recent years such as Covid-19, ongoing conflict in Ukraine and the Middle East, have impacted the finances of individuals and businesses and on the stability of the housing, employment and financial markets. We can expect the percentage of those deemed to be financially vulnerable to rise as businesses cease to trade or make redundancies to survive.
It is difficult to predict how and when the financial hardships caused by Covid-19 and global instabilties are going to end – although it is safe to say that for many it will involve much greater financial hardship than they are already facing.
Now more than ever, financial institutions, providers and advisers need to be alive to how their actions as both individuals and institutions will impact on the outcomes of others and begin to develop their strategies and toolkits to support the increasing numbers of those deemed to be financially vulnerable.
Detecting vulnerability is not always easy and may require a specialist assessment. If you are unsure about your clients vulnerability, then please contact us on 0333 577 7020 or firstname.lastname@example.org