Vulnerable Customer

The FCA definition of a vulnerable customer is someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care.

Ofgem defines a vulnerable customer as when a consumer’s personal circumstances and characteristics combine with aspects of the market to create situations where he or she is:

• significantly less able than a typical domestic consumer to protect or represent his or her interests; and/or
• significantly more likely than a typical domestic consumer to suffer detriment or that detriment is likely to be more substantial

Studies have shown that most people don’t identify themselves as being vulnerable, making vulnerable customers difficult to recognise.  Further complexities arise as vulnerability can be permanent, temporary or recurring, depending on circumstances.

The FCA goes on to identify four key drivers of vulnerability. These are;

Health: This refers to disabilities or short-long terms illnesses that may affect an individual’s ability to carry out day-to-day activities.

Life events: This touches on major life events such as death, a job loss, or a relationship breakdown i.e. divorce.

Resilience: This makes reference to the low ability of an individual to withstand financial or emotional shocks.

Capability: This alludes to limited knowledge of financial matters or having low confidence in managing money. This also includes low capability in areas such as digital or literacy skills.

Regulatory bodies want to ensure that firms protect their vulnerable customers and provide them with a level of care appropriate for their needs.  This might be using alternative communication channels because a disabled consumer isn’t able to get to a branch or a blind customer might request braille.

To learn about how we can help you better recognise, record and respond to all customer vulnerabilities, visit our customer vulnerability page.