The Intermediary – July 2025 - Flipbook - Page 20
L AT E R L I F E L E N D I N G
In focus
Vulnerable
customers are
a growing concern
M
ore and more of
the UK population
are classed as
vulnerable –
which should
both worry
and motivate financial services
intermediaries in equal measure.
In fact, our recent white paper,
‘Vulnerability in 2025’, revealed that
more than half of financial services
customers in the UK now qualify as
being vulnerable.
As a consulting and customer
solutions company, we can see
the challenge this poses as well as
the opportunity.
The rise is largely due to a neardoubling in cases of mental health
conditions, from 10.2% to 19.5% in
2024. Additionally, 16.7% said they felt
financially stressed in 2024, up from
14.1% in 2023. We identified a jump in
the number of customers reporting an
addiction and experiencing financial
distress because of it – 3.5% today
compared to 0.8% in 2023.
Our survey found that a worrying
number of individuals are still
unaware that they would be classified
as vulnerable, at 53%, although this
has fallen from 67% in 2023.
Driving the rise
Part of the reason for the increase in
detected vulnerability is thanks to
financial services firms themselves
actively asking customers about their
needs. However, far too many just rely
on individuals self-reporting, which
doesn’t show the full picture when so
many are unaware they may require
extra help.
At Huntswood, we have seen
examples of firms not joining up their
teams and information holistically,
meaning customers must say they
are vulnerable multiple times to get
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The Intermediary | July 2025
proper assistance. Treating vulnerable
customers fairly is crucial for
intermediaries, and not just because
it’s the right thing to do.
The Financial Conduct Authority
(FCA) takes a dim view of firms that
do not properly take vulnerability into
account when handling clients.
The regulator has made it clear that
all customers are at risk of becoming
vulnerable, and that firms should
consider vulnerability on a spectrum,
related to four key drivers – health,
life events, resilience and capability.
The right culture and technology,
used properly, can be a major help for
firms seeking to improve how they
treat their vulnerable customers.
A matter of duty
Not spoing customers that need extra
help can have serious consequences,
even when clients know they need
this assistance. We found that just
29% of vulnerable customers said
organisations they deal with knew of
their vulnerable circumstances, while
42% said their firm was unaware of
their need for support. A further 29%
said they were unsure if the firm was
aware or not of their situation.
The research found that vulnerable
customers whose provider was aware
of their vulnerability, but whose
needs went unacknowledged, resulted
in 82% saying they were le feeling
unsatisfied. This contrasts with just
18% of dissatisfied customers whose
firm knew about their vulnerability
and had acknowledged it when dealing
with a client.
The lack of empathy felt by
customers whose firm did not
acknowledge and support their
vulnerability resulted in those clients
reporting negative emotions such as
anger, sadness and disgust towards
their provider.
MARTIN DODD
is chief executive of Hunstwood
Conversely, those at-risk clients
who felt their circumstances were
acknowledged and supported were
more likely to express positive
emotions such as trust, joy, and
even surprise.
Helping hand
So the big question is – what can
intermediaries do to help? We would
recommend several strategies to help
mitigate the risk of failing to support
vulnerable customers.
These include ensuring clear
documentation is provided that
highlights important information,
such as insurance policy exclusions,
in accessible formats. We would also
suggest protection intermediaries
improve identification of vulnerable
customers to maximise opportunities
to prioritise claims handling activity.
Most intermediaries already do
this, but we recommend ensuring
that proper provisions are made for
more elderly clients, who may feel
excluded from online channels and
may make unsuitable decisions due to
impaired judgement.
Intermediaries would also do well to
contact known vulnerable customers
in advance of potentially impactful
events for home and travel insurance,
and take steps to minimise risk and
provide additional support.
Intermediaries are the first line of
defence in financial services when
it comes to identifying and helping
the vulnerable.
It is clear that, now more than ever,
intermediaries must have excellent
resources in place to identify those
that may need a lile extra help – this
is set to be a growing proportion of
the population. ●
