FCA publishes guidance on treatment of vulnerable customers

The Financial Conduct Authority (FCA) has published a 41-page piece of guidance for businesses on how to treat vulnerable customers better.

The guidance is split into a number of sections: understanding the needs of vulnerable customers, skills and capability of staff, product and service design, customer services, communications, and monitoring and evaluation.

Fundamentally, the FCA said it wanted to see firms doing the right thing for vulnerable consumers and have that embedded in their business culture.

The main aim, the regulator said, was for firms to be more focused on ensuring outcomes for vulnerable customers were at least as good as those of other clients. It also wanted to see greater consistency across both firms and sectors so vulnerable customers were treated fairly no matter what financial service or product they were buying.

Who are vulnerable customers?

For the purposes of its guidance, the regulator said a vulnerable customer is someone who “due to their personal circumstances is especially susceptible to detriment” and that its definition was intentionally broad.

It added: “Some consumers will be actually vulnerable because of their personal circumstances. Actual vulnerability can be permanent but is often transient because consumers’ circumstances constantly change. This can cause consumers, who had not previously been vulnerable, to become so at some stage of their life.”

The FCA said examples of vulnerability could include health conditions or illnesses that affect the ability to carry out day-to-day tasks, the low ability to withstand financial or emotional shocks, major life events such as bereavement or relationship breakdown, and low knowledge of financial matters.

FCA executive director of strategy and competition Christopher Woolard said: “Protecting vulnerable consumers is a key priority for the FCA and we want to see firms explicitly embedding the fair treatment of vulnerable consumers into their culture. Where we find that firms are not doing enough to ensure that consumers are treated fairly, we will take action.

“Firms need to take particular care to ensure that vulnerable consumers are treated fairly as they may be more likely to experience harm. The guidance should drive improvements across the industry, improving outcomes for millions of vulnerable consumers”.

Well done the FCA, say I.

Give youth a chance

Having been in this business for 30+ years, it is fair to say that I am not in the first flush of youth.   And that length of time in business has set me thinking about two very important points.  First, is financial services a career for young people? And second, if so, are young people taking it up?

My view is of course that it is an excellent career choice for a young person but are they taking it up?  I attend numerous seminars arranged by professional bodies and by insurance companies advocating their products.  What I see when I go to these events is a distinct lack of young people in the room.

“Where are they all?”

Traditional arguments against young people typically centre around the argument that clients of an older generation, who are usually the ones with the money, want advice from people of their own age group.   Would a person in their 50s or 60s, it is said, be prepared to really take advice from a veritable youngster?  Would they not prefer to receive advice from a man or woman who has seen a bit of life, found out about the problems that can suddenly overtake them and understand all the complex events that can happen?

Of course, there are practicalities to be considered.  If the client is in, say, his mid-fifties, does he I really want an adviser who is the same age or older than him? What if that adviser retires at the same age, or dies? Will that older adviser be able to advise the clients in their declining years, or will that client have to find a adviser in later life and start the planning process all over again?

This is, of course, particularly relevant to clients with large pension pots which require attention for maybe 30 years or more.

You also have to ask whether an adviser has to have the same sort of experiences as the client to be able to advise them. For example, unmarried advisers regularly give advice to married clients and similarly advisers who might never have claimed on a Critical Illness Policy, advise clients who have.

Its all about listening to the client, being aware of their aims and objectives and understanding their fears and ambitions.  You don’t have to be the same age as the client to empathise and advise. 

Many youngsters want to learn, pass on that knowledge and will give good responsible advice. 

No matter someone’s age, he or she may be able to teach us and our clients a thing or two. So why not give youth a chance?

Have YOU made a will?

Did you know that around 27 million adults in the UK have not made a will?

This can have serious consequences, especially if you’re a parent. Dying without a will means the law will simply run its course, often against your wishes.  It’s a huge risk that leaves you powerless over your assets.

Why A Professional Will Is Essential

The technical term for passing away with no valid will is ‘dying intestate’. If this happens, your money, possessions and property will be divided up according to the law, and the people you love most dearly could inherit nothing.

For example, if you have a life partner but are unmarried and die ‘intestate’, your partner would receive nothing in terms of the law. If you have children this can complicate things further, as the law often places them above your partner in the pecking order – and if you have children from a previous marriage or relationship, they could be completely passed by too.

Dying without a will means you have no control over who stands to inherit your assets and even worse, if you pass away with no close relatives, your estate could pass automatically to the government, who claim millions of pounds from this every year.

Writing a will can be easy and some people feel they save money by doing it themselves.  But more often than not, it’s tricky and you are well advised to get professional help.  It’s not that expensive particularly in relation to the value of what your estate may be worth.

The sooner you plan ahead, the sooner you’ll get peace of mind.  And if you use the services of a Solicitor or a Professional Will Writer, you will be asked to consider the following as a minimum.

1.                 Who exactly do you want your benefactors to be. Rather than letting the law decide, you can divide up your inheritance in whatever way you want.

2.                 Who do you want to nominate as your children’s guardians. If you have children under 18 and the worst does happen, you need to plan ahead for their future.

3.                 Who do you want your executors to be. Pick the person or persons you trust who will make sure your will is properly adhered to.

4.                 Do you have any specific wishes for specific possessions. Many of us have treasured heirlooms or keepsakes – a well-written will lets you pass these heirlooms onto the person or persons you want to have them.

If you would like any help or advice about selecting a Solicitor or Professional Will Writer, please feel free to contact us.  We will be happy to assist.

Savers urged to be vigilant after fraudsters steal £202m from pensions

I noticed this piece in the Mail on Sunday and found it to be very disturbing.

The Insolvency Service, which is a part of the Department for Business, has shut down some 24 companies guilty of pension abuse since 2015, according to this Mail on Sunday piece. Around 3,750 victims have been affected, including both individuals and businesses, with losses amounting to more than £200m. Eight company directors have been disqualified for a combined 57 years as a result of the victims’ losses, the article adds.

“There is no room for complacency,” warns Aviva head of savings and retirement Alistair McQueen. “We may spend 40 years saving, so we should spend more than 40 minutes considering our options at retirement.”

Consumer minister Kelly Tolhurst adds: “If you are approached to make an investment from your pension, always do your homework and seek independent advice. If you think you are a victim, report it to Action Fraud or visit the Scam-Smart website for further help.”

Please, if you know someone who is considering taking their pension without taking proper Independent Financial advice, try and persuade them to take advice from a Financial Adviser who is  regulated by the Financial Conduct Authority and who authenticity can be verified.


Firms benefit from demand for independent advice

A Financial Services Group in the Midlands has said it has seen a 50 per cent increase in staff over the past five years with turnover and pre-tax profist more than doubling on the back of increased demand for independent advice.

The firm’s assets under advice or trusteeship and administration have increased dramatically and their managing director has said that the company’s expansion was due to a significant decrease in independent advisers and competitors.

He said the firm’s growth had led to them recruiting new members of staff and extending its offices in the Midlands.

He said: “People are waking up to the fact they are often locked into high fees and uncompetitive investment products from advisers who are not independent and don’t have access to the whole of the marketplace.

Here at ABFM, we too are seeing an unprecedented increase in enquiries from potential clients in the West of Scotland, and like our colleagues in the Midlands, we also are expanding our staff to cope with the increased demand.

The most underrated financial planning advice – Part 4

In my last blog, I talked about getting things the wrong way round and not diversifying as mistakes people make in their financial planning.   Let’s finish off this little series by being a bit more positive.

Firstly, be the tortoise, not the hare. “How can I become a millionaire by 35?  How can I become wealthy in five years?”  The answer of course is, “What’s the hurry?  Just make sure you become wealthy by 65.  That’s enough of a challenge.   And the only one you really need to accomplish.”

Secondly, enjoy life as it is.  “I want to retire at 55 and see the world. Then I can really enjoy life.”  Unfortunately, I’ve learned life goes by freaking fast.  If you put off enjoying it even to 55 you’ll miss most of it.  Instead enjoy the journey.  Enjoy building your wealth.  Enjoy the game. Take little steps everyday.  And enjoy it with those you love.