Financial Planning for Vulnerable People

The coronavirus crisis has served to heighten the issues around vulnerable people. At first glance this is unsurprising given the age profile of people being particularly affected, such as those who are elderly and possibly in poor health.

However, the impact of coronavirus and the far-reaching economic implications have arguably pushed us all into the ‘potentially vulnerable’ category, meaning advisers have a more important role than ever in ensuring clients make the right long-term financial decisions.

Ross Liston, Managing Director of Bankhall and PMS

Vulnerable People

It is a fact of life that we can all become vulnerable at some stage in our life. That can make it more difficult to continue our journey towards prosperity.

In terms of dealing with our financial planning the Financial Conduct Authority (FCA) describes a vulnerable person as ‘someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care’.

Vulnerable people are significantly less able to engage with the financial services industry and, if anything went wrong, would suffer disproportionately. The cause of vulnerability falls into one of the following four categories:

  • Health both mental and physical (e.g. blindness or deafness)
  • Financial resilience (e.g. level of overall indebtedness/wealth)
  • Life events (e.g. bereavement, loss of an income, inheritance, lottery winnings)
  • Capability (e.g. financial knowledge or confidence).

Areas of vulnerability

  • Literacy and Numeracy – In 2015, the OECD conducted its Survey of Adult Skills. This survey found that 16.4% (or 1 in 6) of adults in England, and 17.9% (or 1 in 5) adults in Northern Ireland, have literacy levels at or below Level 1, which is considered to be ‘very poor literacy skills’. Level 1 may not be able to read bus or train timetables or understand their pay slip.
  • Savings – More than 16m people in the UK have savings of less than £100.’ From a study by the Money Advice Service (MAS).  September 2016
  • Cancer – 1 in 2 people in the UK born after 1960 will be diagnosed with some form of cancer during their lifetime. Cancer Research UK May 2020
  • Caring Responsibilities – One in four older female workers, and one in eight older male workers, have caring responsibilities. Office for National Statistics March 2019
  • Dementia – Over 850,000 people in the UK are living with dementia – that’s one in six people over 80. With numbers set to rise to over a million by 2025, increasing to two million by 2051. Age UK May 2020
  • Disability – 7.9 million people of working age (16-64) reported that they had a disability in July-September 2019, which is 19% of the working age population. House of Commons Library
  • Mental Illness – 1 in 4 people experience mental health issues each year. At any given time, 1 in 6 working-age adults have symptoms associated with mental ill health. Mental Health First Aid (MHFA) England
  • Old Age – In mid-2016, there were 1.6 million people aged 85 years and over. Office for National Statistics August 2018

The Financial Conduct Authority’s concerns

  • Financial services products and systems are often ‘streamlined’ and not designed to meet non-standard needs of those who don’t fit into a set mold.
  • The response of frontline staff – whether it’s in a branch or on the phone – is crucial to the customer’s experience. The firm may have great specialist teams or policies, but if frontline staff don’t deal with the situation appropriately, access to a good outcome may be missed.
  • Staff on the frontline do not need to be experts, but they need sufficient training to facilitate a proper conversation, to know where internal expertise lies, and know how and when to refer on.
  • Most problems relate to poor interactions, or systems that don’t flex to meet needs, therefore making people’s situations more difficult.
  • Some consumers are overwhelmed by complex information and can find it hard to distinguish between promotional material and important messages about their products.
  • In some areas, an inaccurate interpretation or overzealous implementation of the rules (such as those around data protection or affordability) is preventing firms from meeting the needs of vulnerable customers.
  • Many vulnerable consumers may be valuable customers if firms respond to their needs and treat them flexibly. However, these consumers may withdraw from the mainstream market and their problems may spiral if their needs are not met.

How should you be treated?

If you are a vulnerable, or potentially vulnerable, customer of a bank, building society, insurance company, investment group or financial adviser then they are required to make sure of the following:

  • Any advice given to you is wholly suitable to your needs having taken account of your potential future needs (e.g. the likelihood of the need for long term care).
  • You have the capacity to understand the implications of any advice given and are able to make your own decisions.
  • You are offered the opportunity to be accompanied during your dealings with them by a family member, friend, or someone independent of them.

What needs to be arranged

You (or someone you know) may lack the capacity to deal with your own financial affairs, or do not wish to handle them.  In this case instructions can only be taken from someone who holds the legal authority to act on your behalf.  That is:

  • an Enduring Power of Attorney
  • a registered Lasting Power of Attorney (property and affairs) or
  • a Court of Protection Deputyship Order

The elderly

What if you (or someone you know) has an average life expectancy of less than five years? Or what if you (or someone you know) have severe health issues, meaning that your life expectancy could reasonably be expected to be less than five years?

In this case the financial services organisation that you are dealing with should recommend to you that you include any potential beneficiaries within your discussions. This will ensure that all parties understand the reason for the recommendations and the strategy being undertaken.

The FCA takes the view that if you are over the age of 75 you are naturally vulnerable.  That does not mean that you are, by any means.  But it does mean that they should assume you are until they have made an assessment to satisfy themselves that you are not.

If you are over the age of 75 and their assessment is that you are vulnerable then the financial services organisation you are dealing with should offer you the opportunity to be accompanied during your dealings with them.

Be aware of scams

It is an unfortunate fact of life that there is a criminal fraternity who like to prey on vulnerable people because they are a ‘soft touch’.

If you (or someone you know) are a vulnerable person for any reason I would encourage you to look at the updates on the FCA’s Scam Smart pages. Here you will see the key warning signs of scams and what to do

Certainly we all need to avoid engaging in unsolicited correspondence, telephone calls and emails.  This knowledge could literally save someone a fortune.

Personal loans, credit cards and overdrafts

The FCA has introduced temporary measures to support customers who have personal loans, credit cards or overdrafts. The measures include lenders:

  • being required to agree to a temporary reduction or suspension of credit card or personal loan payments (for up to three months), and
  • to provide interest-free overdrafts (on the first £500 of any overdrawn balance) for customers who are struggling financially.

Power of Attorney

A Power of Attorney should be used to help vulnerable people make decisions, or to make the decision on their behalf. They are there to provide more control over what happens to your assets and you if you have an accident or illness, whereby you lack the mental capacity to make the decisions.

I would encourage any adult to set up a Lasting Power of Attorney so that your financial affairs can still be dealt with by people you trust if you lose the capacity or the desire to do so yourself.  Two attorneys are preferred and these could be family members or close friends but ideally at least one of them should be younger than you.

There are two types of Lasting Power of Attorney; Property and Financial Affairs and Health and Welfare. The latter is a follow-on from what used to be called a ‘living will’.  It is a straightforward matter to complete an application form online at If you at all unsure as to how to do this then please arrange this via a solicitor. It will cost a bit more but it will be done right which is the most important thing.


I would encourage every adult to think about putting a will in place if you haven’t got one already.

A will is there to protect your assets, regardless of how many possessions you have; and to instruct your final wishes with regards to those assets.

A will also enables you to appoint guardians if you have children under the age of 18.



This information does not constitute personal advice and should not be treated as a substitute for specific advice based on your circumstances.

Information given relating to tax legislation is based on my understanding of legislation and practice currently in force. Whilst I believe my interpretation of current law and practice to be correct in these areas, I cannot be responsible for the effects of any future legislation or any change in interpretation or treatment. In particular you are warned that levels of tax and tax reliefs are subject to alteration and, in any case, the value of such reliefs and benefits may depend on an individual’s circumstances.

If you are in any doubt as to whether any course of action is suitable for you, then you should discuss the matter with a suitably qualified independent financial adviser or other specialist.