Once in a while it’s helpful to step back from the barrage of FCA rules affecting the advice profession to examine the regulator’s wider priorities. Apart from transparency, culture and accountability, one cross-sector theme has stood out in my mind of late: vulnerable clients.
Whether you are an adviser or a high-street bank, an asset manager or a peer-to-peer lender, an insurer or a claims manager, the message is clear: you need to make sure your customers’ vulnerabilities are handled appropriately.
Fortunately, we are seeing an increasing amount of guidance from the regulator on what that actually means. Age is obviously a key factor, but it is not the be-all-and-end-all of vulnerability. Illness, divorce, financial abuse, redundancy, toxic debts, addiction – all of these are part of the intricate tapestry that could lead a client to become vulnerable.
While the FCA cares about these issues wherever they crop up, financial planners are at the thin end of the wedge. They are charged with protecting precious retirement savings and ensuring adequate care provision at a time when family conflicts run hottest and scammers swoop fastest.
There has never been a better time to get your processes in order. Advice firms large and small should look at the management information they collect and how they keep their records so they can spot red flags as soon as possible.
Progress is certainly being made. I applaud the CII’s decision to expand the vulnerable client unit it launched recently in conjunction with SJP to the whole of the advice market, and to offer it to all at the same discounted rate of £350.
I’m sure SJP would have wanted to retain this exam solely for its staff for as long as possible given the work it put in to its development. It would also have been a unique selling point to potential recruits to SJP, providing evidence of the firm’s ethical credentials.
It’s irrelevant, frankly, whether the CII expanded the unit only because it had worked out it could make more in exam fees. The fact is the more advisers get the chance to take qualifications on vulnerable clients, the better.
Specialist firms are emerging and growing, like Frenkel Topping, the IFA and asset manager focused on asset protection for vulnerable clients, which is nearing the £1bn funds mark with health profitability.
The FCA hosted more events on the topic of vulnerable clients recently, and its consultation on the next steps closes on 4 October. Time for the advice profession to double down on its good work.