22% of advised customers are vulnerable as industry leaders challenge the label
11 Sep, 2024
22% of advised customers are vulnerable as industry leaders challenge the label
Speakers at Boring Money’s Consumer Duty conference in London highlighted vulnerable customers as one of the main focus areas for firms in the coming months, as they rise to the ongoing challenges of Consumer Duty.
Liz Field, Chief Executive, PIMFA, thought that tackling vulnerable clients would be the main challenge for firms over the coming 12 months but also identified difficulties around the naming and articulation of this, as well as the ability to actually deliver meaningful change.
“The problem with the vulnerable label is that it is episodic, it is difficult to identify, and once you do identify this, what do you do next”
A new report published today by Boring Money – Understanding Vulnerable Customers 2024 – finds that vulnerable customers are more prevalent than common industry assumptions.
5.6 million UK investors – or 33% of all investors - exhibit at least one vulnerable characteristic as defined by the FCA
Low financial confidence is the most significant factor, affecting 18% of all investors.
Vulnerability is notably higher among women over 65 and individuals under 35, often with assets below £250,000.
If we consider vulnerable characteristics by specific sectors, we see that 22% of advised customers display at least one vulnerable characteristic, and financial vulnerability is the most cited source, impacting 9% of all advised customers, followed by mental health which impacts 7% of all advised customers.
Boring Money’s CEO Holly Mackay adds:
“Vulnerable is a small word with a broad definition. Industry assumptions about vulnerable customers are often based on received wisdom rather than data. Our work shows that it is in fact younger investors who are more likely to say they need additional support with any given vulnerable characteristic. And confidence, mental health, emotional and financial vulnerability are more significant sources of vulnerability for the wealth sector than physical vulnerabilities.
“In addition to younger investors, the data show that women aged 65 and above need more support from the industry.
“Firms are struggling to respond to the FCA’s demands. The typical response to any Board questions on vulnerable customers has been to increase font sizes – but the industry needs better data and information in order to proportionately match its response to the need.”
