Two-fifths of people who have had experiences that could make them classed as vulnerable customers by financial firms do not realise they could be defined in this way, a survey indicates.
The risk of being vulnerable could be increased by people experiencing health issues that affect day-to-day tasks; going through life events such as a bereavement, job loss or relationship breakdown; having a low resilience to withstand financial or emotional shocks; or a low capability or confidence in managing money or in other areas such as literacy or digital skills, according to guidance previously set out by the Financial Conduct Authority (FCA).
Website Smart Money People commissioned a survey asking people about circumstances they had experienced. They were then asked if they would consider themselves vulnerable in relation to their finances when they were experiencing these situations.
But 40% of those who selected that they had experienced one or more characteristics over the past five years which could potentially make them vulnerable did not consider themselves vulnerable.
The FCA has been encouraging people to open up to their financial firm, to get the right support.
As well as issuing guidance to help financial services firms support consumers in vulnerable circumstances in 2021, it introduced the Consumer Duty in 2023, which requires firms to deliver good outcomes for all customers, including those in vulnerable circumstances.
The research – published by Smart Money People – indicated that one in six (16%) people with characteristics of vulnerability said their situation made it more difficult to make financial decisions, and a further one in seven (14%) said it distracted them from managing their finances.
Its research also indicated that those in vulnerable situations could be particularly susceptible to scams.
Nearly a quarter (24%) of vulnerable customers said their circumstances made them more susceptible to fraud, and 8% reported they were targeted during times when their emotional state left them unable to think clearly or make sound financial decisions.
Some vulnerable customers said they chose not to disclose their situation to financial providers because they believed that it would not change how they were treated. Some were also concerned about privacy or feeling embarrassed, or that it could make their situation worse.
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Those experiencing relationship breakdown or divorce were particularly likely to be concerned about feeling embarrassed.
People aged 55 and older in vulnerable circumstances were particularly unlikely to discuss their situation with financial providers, the research found.
But the majority (52%) of vulnerable people who did tell their financial provider about their situation said their treatment was more positive than before they disclosed it.
This included better customer service, more communication checking in on them, and more information to protect them from fraud or scams.
Jacqueline Dewey, CEO, Smart Money People, said: “Our study highlights that the definition of vulnerable circumstances is far broader than many realise.”
Kate Pender, CEO at Fair4All Finance, said: “Opening up about your position to a financial services provider can be the difference between getting the right support and ending up struggling.”
Smart Money People commissioned One Poll to survey 2,000 people across the UK in May and June, with 1,000 having situations in the past five years which indicated characteristics of vulnerability.
Sarah Pritchard, executive director, competition, markets and international at the FCA, said in March: “It can be hard to tell your bank or insurer about your specific needs, but those who ask for help tend to feel more supported.”
