Protecting Vulnerable Customers
At NorthStar Wealth Management, we are committed to protecting vulnerable customers. To this end, we have devised this ‘Vulnerable Customer Policy’. The aim of this policy is to outline the practice and procedures to contribute to the prevention of detriment to customers who find themselves in vulnerable circumstances. This policy covers all NorthStar team members and areas of work directly with customers.
Definition of a ‘Vulnerable Customer’
The Financial Conduct Authority in its publication Consumer Credit and Consumers in Vulnerable Circumstances (April 2014) defines customers in vulnerable circumstances as follows:
“We consider a vulnerable consumer to be to be someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.”
Vulnerability occurs in a variety of ways which may be permanent, temporary, or even sporadic, dependent on its nature. In many circumstances the individual may not recognise themselves as ‘vulnerable’.
We recognise that vulnerability may not be simply due to the situation of the consumer but caused or aggravated by the actions or processes of the firms they may deal with.
We recognise that customers who might be considered as being in vulnerable circumstances could include those with:
- Mental capacity deficiencies (including language or communication), including mental illness and dementia.
- Stress or subject to financial shock of all types, such as employment concerns, bereavement (or potential bereavement), marital or relationship difficulties.
- A physical impairment that may not allow them to engage with automated, or other standard process requirements (such as photographic ID, phone keypad recognition, or internet applications).
- Severe and long-term illness (both life-limiting and where recovery is expected).
- Little or no financial experience (financially unsophisticated).
- Low income.
- An existing distressed financial situation.
- Responsibilities for others, such as ‘carers’ or acting as power of attorney.
- No access to the internet or other digital media.
- Poor language skills.
- A general vulnerability due to being aged 75 and over or aged 18 years and under.
Identification of Vulnerable Customers
We remain mindful of the potential for enquiry by vulnerable customers and the potential for any change of circumstance in respect of existing customers.
It is important that potentially vulnerable customers are identified to ensure procedures are put in place to help. This means providing additional information, guidance and support to enable them to make an informed decision.
It is critically important to listen carefully to all customers and to identify people who may be classed as a vulnerable customer.
Vulnerability is broad and may occur at any time. It will usually involve the interplay of characteristics of the individual, their circumstances, and static or transitory status.
We only deal with customers in vulnerable circumstances where we are aware of their needs:
- Mental capacity deficiencies – the FCA provides clear guidance on the identification of mental capacity limitation issues in their Handbook, specifically under CONC 2.10.8.
- Stress or financial shock – may be identifiable (facial expression, posture or stance etc.), but otherwise may be revealed through conversation before and during interview.
- Physical impairment – may be identified visually, or through interview.
- Severe and long-term illness – may be identifiable through conversation or through interview.
- “Financially unsophisticated customer – may be identified through the factfind process and their credit profile.
- Low income – may be identified through interview and credit profile.
- Financial distress – may be identified through interview and credit profile.
- Carers – may be identified through interview or conversation.
- Digital exclusion – identifiable through interview or via routes of engagement (or non-engagement) with the firm.
- Poor language skills – may be audible or identifiable via routes of engagement with firm
- Customers aged 75 and over or customers aged 18 years and under – should be offered the opportunity to have a relative or friend accompany the customer to a meeting
Steps to Take When Dealing With Vulnerable Customers
If any member of the NorthStar team feels they are dealing with a potentially vulnerable customer, they should report this to a member of the management team immediately.
Following internal discussions, where a vulnerable customer is identified, this will be recorded on the customer file. A plan will be put in place to help the vulnerable customer. This will be on a case-by-case basis with the requirements dependent upon the specific circumstances of the vulnerable customer.
We will not discriminate against person in vulnerable circumstances by way of adjustment to fees or any refusal to assist purely on the grounds of the customer’s circumstance (unless that circumstance creates a situation which is likely to lead to detriment or a risk that removes the availability of any finance facility).
We will review our vulnerable customers practices periodically for consistency and to determine adherence to the stated policy.
Examples of mitigating actions for customers with mental capacity deficiencies (for the avoidance of confusion “competent person” means an individual without the limitation presented by the customer) include:
Capacity issue: Language or other communication created by disability. Customer cannot fully understand important features of their agreement with us, their recommendation or the consequences of that recommendation
Mitigation: Customer to instruct a competent person to act as interpreter. Customer to nominate a reasonable communication medium suitable for their disability.
Capacity issue: Mental incapacity (temporary) e.g., intoxication, mental illness. Customer cannot fully understand important features of their agreement with us, their recommendation or the consequences of that recommendation. Potential for reckless disregard for consequence.
Mitigation: Customer to instruct a competent person to communicate on their behalf. Legal agreement must be reached outside of any period of incapacity.
Customer should be encouraged to seek independent professional advice. If legal agreement cannot be reached outside of any incapacity, customer must provide ‘Power of Attorney’ for a competent individual to act on their behalf.
Capacity issue: Mental incapacity (permanent). Customer cannot fully understand important features of their agreement with us, their recommendation or the consequences of that recommendation. Potential for reckless disregard for consequence. Possibility that any agreement might be unenforceable as a result of known incapacity.
Mitigation: Customer must provide ‘Power of Attorney’ to a competent individual to act on their behalf.
All members of the NorthStar team dealing with a vulnerable customer have an ongoing duty to report any changes in circumstances or concerns to a member of the management team. In these circumstances, the plan in place should be considered for revision.
To ensure our duties are met in relation to protecting vulnerable customers, the senior management have the following responsibilities:
- To abide by the FCA’s principles and rules in relation to vulnerable customers covered in publications such as ‘FCA Principles for Business 6 & 7’, ‘ICOBS 2.2.2R; and 6.1.5R.’ , ‘CONC 8.2.7.’ and ‘DEPP 6.5A.2 (calculation of enforcement fines); and Individual conduct rules (treating customers fairly).’
- To ensure all members of the NorthStar team are aware of this policy and are adequately trained.
- To provide a means of reporting any instance where a potentially vulnerable customer is identified.
- To support anyone identified as being a vulnerable customer.
The responsibilities of all NorthStar team members are:
- To be familiar with this policy and vulnerable customer procedures.
- To report any instances where they believe a customer may be vulnerable to the management team.
- To take appropriate action in line with this policy where necessary.
Should you require more information about our Vulnerable Customer Policy, or anything else covered on this page, please contact us.
Awards, Accreditations & Trade Associations
NorthStar is proud to be members of the leading financial planning trade associations. Through a continued commitment to work to the highest professional standards and deliver real value to all clients, our work has been recognised with a number of awards and professional accreditations.