Negative associations around what it means to be vulnerable could lead to clients not receiving the support they need, the CEO of a vulnerability assessment provider said.
Jonathan Barrett (pictured), CEO of Comentis – a company that developed an assessment platform for vulnerability – said there was a stigma attached to the term.
He suggested firms with vulnerability working groups or task forces consider using different terms to remove this.
“There’s been a lot of talk in that, when you’re dealing with clients, you should never use the word ‘vulnerability’,” Barrett added.
Even when the word is not used in front of clients, Barrett said when it is used within a business, this could still create an “unconscious bias” and cause an organisation to think of vulnerability negatively.
Barrett said: “In the early days, when we spoke to some firms, they would tell us, ‘we don’t have any vulnerable clients’, and they put it like it was a negative thing to have a vulnerable client, which is rubbish. Everyone has a broad range of circumstances.”
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Barrett said vulnerability was simply determining whether a client had additional support needs, adding: “That is it, some will and some won’t”. He noted that people in vulnerable circumstances may not always need support, but it was still key to be aware of their situation.
Vulnerability is quite common
“Vulnerability can affect anyone”, Barrett said, adding that some research suggested most people were only “two steps away” from being vulnerable, with it taking a job loss, income change or becoming a carer for them to meet that criterion.
Having had experience as a mortgage broker himself and now selling his company’s platform to financial services firms, Barrett said vulnerability seemed to have a more negative connotation in the mortgage sector than it did in other sectors like pensions, because there was less uncertainty about whether an application would be successful.
He said: “There’s a lot more apprehension about whether [a client is] going to get the product. It’s all a bit of a mystery. So, there’s probably a view that if you have someone who’s vulnerable, that might go against them in the underwriting process.
“My belief is it won’t, because if we think of the principles of the Financial Conduct Authority (FCA), they say they should have the same outcome as someone who isn’t vulnerable. So, if lenders start embedding this into their underwriting, they’re in really dangerous territory.”
He said knowing which clients had vulnerabilities would just give them access to better support, but this did not always mean there would be a “fundamental shift” in the advice process.
“We refer to it as a duty of care. You have a duty of care towards your client and that is to understand all their needs, and be able to support them so they can have the same outcomes as someone who’s not vulnerable,” Barrett added.
He said if he were a client, the term duty of care would feel like a “much more positive message”.
“Until we change the narrative and perceptions within organisations, we’re still going to see a barrier,” Barrett said.
Firms need identification support
When identifying vulnerable clients manually, Barrett said identification rates were lower than when using technology or other aids because it was “really, really hard to spot”.
“It’s not the sort of thing you ask in a fact-find, and it’s not the sort of thing a client will put forward,” Barrett said, saying the apprehension of getting a mortgage made this more prevalent.
He said when it came to vulnerability, a lot of work had been done concerning training, policies, interventions and processes, but the “weakest link in the chain is still identification”.
Barrett added: “If you can’t say, ‘that’s my client base, I know which ones are vulnerable and which ones are not’, then you’re not going to be giving them the right support.”
Noting that someone was not vulnerable was just as important as documenting someone who was, Barrett said.
He said software, such as Comentis, could be key in helping advisers know which clients had additional support needs.
Referring to recent research from Smart Money People that found brokers were not always notifying lenders of a client’s vulnerabilities, Barrett said this needed to be easily reportable at all points of the distribution channel and said that as the adviser was the main point of contact, the information should come from them.
“It is absolutely vital that there is a real clear means for an intermediary to be able to notify whether someone is vulnerable,” he added.
He also said it was not enough to simply tick a box on an application form, as a lender needs more specific detail on what support might be needed.
“There’s a lot of work that needs to be done to share this information from an intermediary back to the lender,” Barrett added.
He said this should include the nature of a person’s vulnerability or the temporality of it. He said this would avoid lenders having to second-guess or repeat the process of determining a person’s vulnerability, which could sometimes be uncomfortable for a client.
Barrett said the mortgage market needed to catch up regarding vulnerability, noting that more wealth management firms used the Comentis service than mortgage advice firms.
Vulnerability is still under the spotlight
Barrett said the regulator had already gone some way towards changing the language around vulnerability, switching from referring to it as ‘financial vulnerability’ to ‘vulnerable circumstances’, which Barrett said was “a great step forward”, “but I do think there is further we can go to say this is around extra support needs”.
He said it would be good for the regulator to take a lead in changing the narrative.
Barrett said firms needed to continue improving client support because the regulator’s review into vulnerability despite the introduction of Consumer Duty indicated there were concerns.
Regarding industry conferences, Barrett said: “At the last three events I’ve been to, there’s been someone from the FCA speaking. Whatever they’re speaking about, be it fair value, communications or whatever, supporting those who are vulnerable is mentioned every single time without expectation.
“It’s still such a focus of the regulator and still features in its five-year plan.”
