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Vulnerable clients and the financial passport

Date: 07 July 2023

Understanding how to spot the signs of vulnerability and ensuring that the appropriate levels of care are in place within an adviser firm can be challenging.

The Financial Conduct Authority (FCA) in the ‘Guidance for firms on the fair treatment of vulnerable customers’ (July 2020), noted that pre-pandemic, 24 million people displayed one or more characteristics associated with vulnerability.

In its guidance, the FCA set out four key definitions of vulnerability:

  • Health: health conditions or illnesses that affect the ability to carry out day-to-day tasks
  • Life events: major life events such as bereavement, job loss or relationship breakdown
  • Resilience: low ability to withstand emotional or financial shocks
  • Capability: low knowledge of financial matters or low confidence in managing money (financial capability)

Given the Covid-19 pandemic, this has brought some of these issues into even sharper focus, with the change in ‘normal’ living affecting everyone. For some the situation has unfortunately led to life-changing outcomes, through health, bereavement, financial shocks and panic with regards to their financial matters. As a result, the FCA recognises that the number of potentially vulnerable clients is higher than originally quoted.

Unfortunately, the situations arising from the pandemic are going to continue to grow with the threat of job losses after the furlough scheme ends, potential future lockdowns, travel restrictions, all coupled with Brexit and a US election. Therefore, our perception of the number of vulnerable clients that an adviser would ordinarily encounter prior to the pandemic has increased substantially.

What is certain is that the future remains unknown, and the long-term effects on people’s health, mortality and financial position will only be discovered over time.

So, how can we be supporting all our clients with the world in such a vulnerable state?

Now is the time to review your client bank and identify anyone who may be at risk of falling into any of the FCA’s definitions of vulnerability. Identifying these individuals early ensures advisers are well placed to offer the right kind of financial support in the months ahead.

Quilter Cheviot has been discussing vulnerability practices when looking at clients later in life over the past couple of years, sharing ideas and support to advisers. Included within the support was a sample Financial Passport which can also be used with all clients at any stage of life but, ideally, before they become vulnerable.

What is a Financial Passport?

The Financial Passport is a document setting out clearly where everything connected to the client’s financial and personal affairs can be found. It includes all professional relationships with full contact details – including doctor, solicitor, accountant, as well as an understanding of other key relationships, such as attorneys appointed on an LPA, and a summary of their responsibilities.

Clearly, the Financial Passport document could help your client communications, emphasising to them the importance of being financially prepared for any eventuality. By asking clients to complete this document, it can help their loved ones locate everything to do with the management of their wealth.

We believe that by preparing a financial fact sheet such as this, clients will have the peace of mind should the worst happen, while the adviser knows they have done everything possible to prepare for all eventualities.

If you would like a copy of the sample Financial Passport, please do not hesitate to contact your BDM.


David Butler

Head of Distribution
My primary role is to create and deliver the distribution strategy for our Regional Development Managers who work with our key introducers. I work alongside our Heads of Office in ensuring that our supporting advisers across the country receive the highest possible care and attention.

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