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COVID-19 - Are all customers now vulnerable?

Posted by H3 on 2020-06-01 13:52:58 BST

We briefly covered customer vulnerability last year; explain how firms should have systems in place to recognise vulnerability, and then a process to ensure the vulnerable customer is treated fairly.  The subject has been raised again in light of the current conditions and we have been asked by a number of brokers ‘Are all customers now considered vulnerable?’


As you are no doubt aware, in the FCA’s view, vulnerability covers a wide variety of situations: illness, disability, family stress, loss of income, excessive debt etc.  The variable severity of the COVID-19 disease makes it difficult to make this a ‘one size fits all’ – the disease is not selective and anybody can catch it, so it’s understandable to think every customer should be treated as vulnerable, however some people are asymptomatic or suffer only mild symptoms.  If there are no external factors, then these individuals should not automatically be considered as vulnerable.

Whilst all customers and staff are potentially ‘vulnerable’ to catching the virus, but this does not mean they necessarily fit the FCA definition of being a vulnerable customer.  All firms need to put in measures to ensure customer and staff safety from the virus, but once this is managed and as long as no other vulnerability has been identified the customer would not be classed as vulnerable.

What needs to be recognised in the current crisis is that more individuals are likely to experience circumstances which may lead to them being considered vulnerable and this may encompass existing customers of your firm who were not previously considered as falling into this category.  Early identification is key to ensure they are treated fairly and in doing so encourage increased customer satisfaction and loyalty.     

Customers may now be vulnerable due to the disease itself – either affecting their health or that of a family member or friend.  They may be under increased stress and be less able to think clearly and make informed decisions. Be particularly wary of existing customers who seem to be acting out of character  

Customers may find themselves with financial difficulties due to the restrictions that have been imposed – many will have seen income reduce or even disappear altogether and may consequently have seen an increase in debts.  Both employed and self-employed will have concerns over job security or future employment prospects, reduced hours, income reduction including the loss of commissions or bonuses, or redundancy/insolvency. The self-employed business owner may also have added worries about their staff.

Some may have developed anxiety or other mental health issues in relation to catching the virus or uncertainty what will happen in the future.

Where you may have identified a customer previously as having a ‘marginal vulnerability’ the pandemic could have added to this so a reassessment may be necessary.

You should already have procedures in place to identify and deal with vulnerable customers.  In light of the pandemic you and any staff may wish to review these so you can know what signs to look for and how you should look to handle each situation.

Measures for dealing with these vulnerabilities include, asking if they would like a family member to be involved, making more time available for the customer to understand and digest any information provided.  You can also make additional calls to the customer to review the advice given, and check the customers understanding.  Importantly they should feel at ease and not pressured in any way when making decisions. 


If you require vulnerability procedures or would like your firm’s procedures reviewed, please get in touch.



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