Financial survival
How do you run a business based on the chance that everybody in your client bank carries a ‘vulnerability risk’ to your own financial survival?
Life is full of unfortunate, unpredictable events, as I mentioned earlier, bad things happen to people seemingly for no particular reason and more rules or increased protection will not stop that no matter how hard regulators may try.
For some perspective, is a car dealer (now regulated of course) responsible for selling you a car but failed to ask if you had ‘cognitive impairment’ issues in a pre-sale checklist and you subsequently crashed it leaving the showroom as you did not bring your glasses with you?
Consumer duty would suggest it is not the driver at fault but the dealer who sold it.
Financial vulnerability has possibly made worse by the Covid-19 lockdowns, government paying people not to go to work, the denial of a proper education for their children and an ease of access to additional employment benefits previously not available until Covid-19 hit.
This year some 9.25m people aged 16-64 were economically inactive, an inactivity rate of 21.8 per cent. Many are registered as disabled, but most are for reasons of mental health.
Rightly or wrongly, pensions minister at the time Mel Stride said we should not let normal life anxieties be classified as mental health problems and yet that is what the regulator seems to be trying to do.
Why is it that, for quite a few years the clarion call to ensure fair treatment has extended way beyond what used to be called ‘treating customers fairly’?
Something I think most advisers have been doing very well at over a very long time, without giving it a name or a rulebook entry.
I am not sure if this is something that the Covid-19 enquiry intends to cover in a module, but, the FCA Financial Lives coronavirus panel survey, carried out in October 2020, “demonstrated that more consumers found themselves in vulnerable circumstances due to the pandemic, with 53 per cent of adults surveyed displaying a characteristic of vulnerability”.
The FCA saw this as an “increase of over 3mn from February 2020, and many of these people may have multiple characteristics of vulnerability”.
The FCA goes on to note: “Not all customers who have these characteristics will experience harm.
"But they may be more likely to have additional or different needs which, if firms do not meet them, could limit their ability to make decisions or represent their own interests, putting them at greater risk of harm.
