The FCA’s key drivers of vulnerability

The FCA advises firms to consider vulnerability as a spectrum of risks where all customers are at risk of becoming vulnerable. This risk increases with the presence of vulnerability characteristics.

These characteristics relate to four key drivers of vulnerability:

  • Health - any condition or illness that affects the ability to carry out daily tasks
  • Life events - these events include bereavement, job loss or retirement
  • Resilience - reduced ability to withstand financial or emotional shock
  • Capability - low confidence and confidence in managing money/financial matters. This driver includes low capability in areas such as literacy and numeracy.

 The FCA has identified seven harms that vulnerable customers can face:

  • Financial exclusion
  • Difficulty accessing services
  • Disengagement with the market
  • Inability to manage a product or service
  • Over indebtedness
  • Buying inappropriate products or service and exposure to mis-selling
  • Scams and financial abuse

Research into the experiences of consumers with characteristics of vulnerability has provided further evidence that the way firms respond to vulnerability can increase or reduce the risk of harm.