Tim Farmer, Clinical Director and Co- Founder of Comentis, a cognitive search engine company, presented a webinar on customer vulnerability for qualifications provider the London Institute of Business Finance in June 2021.

A former mental health nurse, Mr Farmer commented that many individuals with mental health issues and/or mental incapacity problems are vulnerable, but that not everyone with these issues will be financiall vulnerable.

He reminded viewers of the Financial Conduct Authority definition of vulnerability:

“Someone who, due to their personal circumstances, is especially susceptible to harm – particularly when a firm is not acting with appropriate levels of care.”

He also highlighted the four drivers of vulnerability, as defined by the FCA:

  • Health – health conditions or illnesses that affect ability to carry out day-to-day tasks
  • Life events – life events such as bereavement, job loss or relationship breakdown
  • Resilience – low ability to withstand financial or emotional shocks
  • Capability – low knowledge of financial matters or low confidence in managing money, poor literacy, or limited digital skills

Mr Farmer said that the health and life events drivers were more clearly defined, and easier for firms to identify, but that the resilience and capability drivers were less black and white.

His own definition of resilience is the extent to which a person can deal with adversity, trauma, threats, tragedy or significant stress.

Capability, meanwhile, is a person’s ability to reason, plan, solve problems, understand complex ideas and learn from experience. His specific definition of financial capability relates to the combination of “attitude, knowledge, skills and self-efficacy needed to make and exercise money management decisions that best fit with the circumstances of one’s life.”

Mr Farmer said it was vital to foster a relationship where the customer feels like an equal participant, which should encourage them to open up and divulge their indicators of vulnerability. His five steps for creating this appropriate safe space are:

  • Listen
  • Be present
  • Suspend judgement
  • Seek first to understand and then be understood
  • Choose language carefully

If customers are unwilling to open up, Mr Farmer recommended firms should then highlight to the customer that they are asking the questions for the customer’s benefit, and that, if the information is not divulged, it could have adverse consequences relating to the outcomes the customer receives.

He went on to say that firms need to be adept at recognising body language where they meet customers face-to-face or via video chat. They need to ensure they don’t interrupt, take comprehensive notes where applicable and seek clarifications from the customer where appropriate.

Once an employee has completed this process, they should thank the customer for being open and honest and should then ensure they don’t share the information provided with others unless specific permission has been obtained.

Finally, he suggested that identifying a customer’s preferred methods of communication could be important in many cases.