I went to see a band called The National at the Eden Project with my sister, brother-in-law and their friend in the summer.

We’d booked standing tickets months before. Then my sister and brother-in-law found out they were expecting (very exciting), so my sister would be five months pregnant at the gig.

At around the same time, I found out I had narcolepsy (see my online Weekend Essay, 3 May 2024). It also so happened that the friend we went with had mild schizophrenia.

For all firms, large or small, the challenge is to try and relate things to each customer

I remember my brother-in-law telling me about the call he had to make to the Eden Project to get us into the accessible area: “Er, yes, my wife is heavily pregnant, my sister-in-law has narcolepsy and my friend has schizophrenia…. Can we have seats, please?”

I bet they were looking forward to our arrival.

I tell this anecdote because it highlights how quickly vulnerabilities can present themselves. We had booked our tickets in April and, just three months later, my sister and I both needed accessible seating.

It also highlights the extent to which vulnerabilities such as disability can be invisible.

Recognition

It’s easy, when one hears the word ‘vulnerability’, to say, ‘That’s not me.’ My dad has asthma, Type 2 diabetes and high blood pressure, but he still insisted he should take his turn to make a trip to the supermarket during the Covid-19 lockdowns.

This is just one of many issues advisers face when identifying vulnerability in their client base.

We encounter many situations when a client might need support but there isn’t a PoA in place

The Financial Conduct Authority’s definition of vulnerability refers to customers who, due to their personal circumstances, are “especially susceptible to harm”, particularly when a firm is not acting with “appropriate levels of care”.

The regulator has also emphasised the fact people should be referred to as being “in vulnerable circumstances” rather than as “vulnerable clients”.

In its guidance it says: “Firms should think about vulnerability as a spectrum of risk. All customers are at risk of becoming vulnerable and this risk is increased by characteristics of vulnerability related to four key drivers: health, life events, resilience and capability.”

Even with this definition in mind, however, there are so many ways a person can display vulnerability. Plus, life events and health issues affect people in different ways.

There is a knowledge base and a gap that can be filled

“The problem with discussing vulnerability is that it’s quite difficult to define,” says Evelyn Partners head of investment management Chris Kenny.

“Rather than having a series of very clear benchmarks or KPIs [key performance indicators], the industry is trying to find its way, to some extent.”

And, he says, it is not just about defining vulnerability but also about recording and showing that you’re “doing the right thing”.

Struggling firms

Financial services firms of all sizes are “struggling” with several areas, adds Kenny.

“One is the issue of consent,” he says. “What is it that we can get, and how can we do it?”

For all firms, large or small, the challenge is to try and relate things to each individual customer

There is also the question of identification as it is very unlikely that clients will self-identify.

The FCA says that, to deliver good outcomes for vulnerable customers, firms should understand their needs and circumstances. Therefore, the regulator expects firms to “actively encourage” customers to share information about their needs or circumstances, where relevant.

It also expects firms to develop their own method of identifying vulnerability where appropriate, through the data they hold or other means such as external research, customer surveys or panels.

And, as if that weren’t enough to contend with, vulnerability is not a permanent state.

“Advisers need to think: is there a period of time during which there’s a risk of vulnerability, as opposed to it being a state that a client is always in?” says Kenny.

“It could be during a divorce or a short-lived illness, for example.”

Regular and in-depth contact allows the advisers to assess when things are changing and evolving in an individual’s life

Then there is the matter of recording vulnerabilities.

“In our regulated industry, if something isn’t recorded it essentially doesn’t exist,” warns Kenny.

“And finally there’s the question of support — what should we be doing? This causes some concern for advice firms because, even if they manage to clear the first three hurdles, they wonder, ‘Am I doing the right thing?’”

The FCA is keen to get firms up to scratch on all of this. It is expected to make a speech on the matter later this month.

It flagged vulnerability as an issue at the beginning of the year when it launched a review of firms’ understanding of consumer needs, the skills and capability of staff, product and service design, communications and customer service, and whether these supported the fair treatment of customers in vulnerable circumstances.

The industry is trying to find its way, to some extent

This followed a Dear CEO letter to wealth managers and stockbrokers in November 2023 — telling them to reassess the vulnerability of their customers — after the regulator had found that 49% of portfolio managers and 69% of stockbrokers had not identified any vulnerable consumers in their customer bases.

FCA head of department in consumer investments Nick Hulme says: “Vulnerability spans all four of the Consumer Duty outcomes, so getting it right is fundamental to firms ensuring their customers ultimately get a good outcome.”

The Lang Cat consulting director Mike Barrett says: “For all firms, large or small, the challenge is to try and relate things to each individual customer.

“Having a blanket tick-box approach doesn’t achieve that. That’s the poor practice the regulator is trying to stamp out.”

Barrett suggests small firms naturally have more in-depth relationships with clients.

“Regular and in-depth contact allows the advisers to assess when things are changing and evolving in an individual’s life,” he says.

‘Firms should think about vulnerability as a spectrum of risk,’ says the FCA

But smaller firms may lack the capacity to recognise vulnerability.

Kenny says there is a lot more that larger firms and providers can do to help smaller advice-led businesses do “a great job for their clients”, above just trying to compete on price.

He says: “There is a knowledge base and a gap that can be filled.”

Royal London director of policy Jamie Jenkins agrees. He says the need to support vulnerable customers is, rightly, getting more attention, but vulnerability can be difficult to recognise and quantify.

“We work closely with advisers to help them identify situations that might indicate vulnerability, including offering regular webinars,” he says. “We also provide pension and protection insights through our business development managers network.”

Jenkins suggests that advisers can help by putting a power of attorney (PoA) in place with clients “sooner rather than later”.

The problem with discussing vulnerability is it’s quite difficult to define

He adds: “This will really help them to help their clients navigate their finances when they aren’t able to do so themselves.

“We encounter many situations when a client might need support but there isn’t a PoA in place and there is no authority to deal with the third party trying to manage their finances on their behalf.”

Finding the answer

There is no easy answer to identifying and serving clients in vulnerable circumstances. But it is, arguably, one of the most important things a financial planner can do.

After all, if you cannot serve the most vulnerable in society, how can you expect to be trusted by anyone else?

This article featured in the October 2024 edition of Money Marketing. 

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The Financial Conduct Authority (FCA) has interviewed 20 finfluencers under caution for touting financial services products illegally.

It said the individuals were interviewed voluntarily using the FCA’s criminal powers. The regulator has not yet named the individuals under investigation.

The FCA also announced that it has issued 38 alerts against social-media accounts operated by finfluencers that may contain unlawful promotions.

Finfluencers, or financial influencers, are social-media personalities who use their platform to promote financial products and share insights and advice with their followers.

They are not authorised by the FCA and are unqualified to be giving financial advice to their followers, mostly younger people.

Increasing numbers of young people are falling victim to scams, and finfluencers can often play a part.

Nearly two-thirds (62%) of 18- to 29-year-olds follow social-media influencers. Of these, 74% said they trusted their advice, while 90% have been encouraged to change their financial behaviour, according to the FCA.

There has been a significant increase in finfluencers over recent years after a surge in online DIY investing.

Steve Smart, joint executive director of enforcement and market oversight at the FCA, said: “Finfluencers are trusted by the people who follow them, often young and potentially vulnerable people attracted to the lifestyle they flaunt.

“Finfluencers need to check the products they promote to ensure they are not breaking the law and putting their followers’ livelihoods and life savings at risk.”

The regulator has taken a zero-tolerance approach to unauthorised financial promotions online.

In May, FCA brought charges against nine individuals in relation to an unauthorised foreign exchange trading scheme promoted on social media.

The individuals, many of whom were former reality TV stars, had appeared in shows including Love Island and The Only Way is Essex.

They include Holly Thompson, Biggs Chris, Jamie Clayton, Lauren Goodger, Rebecca Gormley, Yazmin Oukhellou, Scott Timlin, Emmanuel Nwanze and Eva Zapico.

Nwanze was also charged with running an unauthorised investment scheme and issuing unauthorised financial promotions.

The trial has been set for 2027 at Southwark Crown Court and they face up to two years in prison if convicted.

The FCA’s finfluencer crackdown has been welcomed by regulated entities.

Paul Harris, financial services and fintech partner, Osborne Clarke, said: “This is a landmark step from the FCA, as it is the first time the FCA has sought to prosecute social-media influencers allegedly connected to the communication of unauthorised financial promotions online.

“While the decision to prosecute is significant, it is not necessarily surprising, given the warnings previously published by the FCA and the recent guidance on the publication of financial promotions on social media.”

James Alleyne, legal director in the financial services regulatory team at Kingsley Napley LLP, added: “Finfluencers need to be aware that the FCA’s perimeter is broad and it is very easy to fall within its jurisdiction even without intending to do so. Similarly, financial promotions are tightly regulated.

“Even where individuals are acting in good faith and creating what is intended to be purely educational content, it does not take much to inadvertently cross the line into regulated business and, by doing so, become exposed to a possible criminal investigation.”

Kate Smith, head of pensions at Aegon, also said: “People need to be very wary of so-called ‘finfluencers’ offering financial advice or guidance online, particularly if they are promoting products or so-called investment opportunities. Alarmingly, an increasing number of young people are falling for these.

“There are strict rules for regulated firms around online communications and the FCA make clear that firms need to take appropriate legal advice to understand their responsibilities prior to using influencers in retail investment.

“However, there are still many unauthorised financial influencers with wide followings offering non-regulated pensions and investment advice on social media and this is concerning. We strongly welcome the FCA intervening to make sure this stops.”

Good morning and welcome to your Morning Briefing for Tuesday 22 October 2024. To get this in your inbox every morning click here.

FCA interviews 20 finfluencers under caution for touting financial products

The Financial Conduct Authority (FCA) has interviewed 20 finfluencers under caution for touting financial services products illegally.

It said the individuals were interviewed voluntarily using the FCA’s criminal powers. The regulator has not yet named the individuals under investigation.

The FCA also announced that it has issued 38 alerts against social-media accounts operated by finfluencers that may contain unlawful promotions.

‘Unprecedented shift’ in fee models used by financial advice firms

There has been an “unprecedented shift” in the variety of fee models used by financial advice firms, a new report from NextWealth suggests.

Percentage of assets remains the most common charging structure, used by 71% of respondents’ firms.

The study shows that while this charging model continues to dominate, its use is in decline – with popularity of all other charging structures rising.

In Focus: Vulnerability is more than just a tick-box exercise

“It’s easy, when one hears the word ‘vulnerability’, to say, ‘That’s not me,’” points out chief reporter Lois Vallely.

“My dad has asthma, Type 2 diabetes and high blood pressure, but he still insisted he should take his turn to make a trip to the supermarket during the Covid-19 lockdowns.

“This is just one of many issues advisers face when identifying vulnerability in their client base.”

Quote Of The Day

No government at all serious about growth would hike CGT on entrepreneurs selling a small business

– Tina McKenzie, Policy and Advocacy Chair at the Federation of Small Businesses, sends out a warning ahead of the 30 October Budget

In Other News

A recent analysis of Origo’s pension-transfer data reveals that a growing number of policyholders are shopping around for the best annuity deals, moving away from their original providers.

According to Origo, while 45% of annuity buyers are sticking with their existing pension provider, 55% are switching to new providers to secure better terms.

The Financial Conduct Authority (FCA) recently reported a 38.7% rise in annuity purchases between the 2022/23 and 2023/24 tax years.

This increase reflects a shift in consumer behaviour, with more people exploring the wider market to maximise their retirement income.

Anthony Rafferty, CEO of Origo, noted: “It’s encouraging to see more pension holders exercising their option to switch providers for better annuity rates. Securing the best deal is essential, as annuity purchases are irreversible.”

Origo also launched the Annuity Transfer Tracker, a tool that provides real-time updates on annuity transfers between pension and annuity providers.

This tool allows advice firms to monitor the progress of their clients’ transfers, improving service and reducing the need for follow-up calls.

Rafferty believes this tool will enhance the efficiency of the pension-to-annuity transfer process and ensure clients get the best possible retirement outcome.

UK borrowing tops official forecasts again as Reeves readies budget (Reuters)

Interest rates to fall to 2.75% by next autumn, Goldman Sachs predicts (The Guardian)

Employment reforms to cost firms up to £4.5bn a year (Bloomberg)

Did You See?

Employee engagement in the UK has hit a concerning 10-year low, with only 10% of employees feeling engaged, compared to the global average of 23%, according to workplace consultants Gallup.

This is particularly alarming for the UK financial services sector, which faces significant challenges as generational shifts approach.

By 2025, Gen Z will make up a quarter of the workforce, while one-third of financial advisers are expected to retire within the next three years.

To navigate this transition, firms must improve their employee engagement and management practices to attract and retain the next generation of advisers.

Read the full story by Simon Evans, director at Clearcut Consulting – Engage First.

ANOTHER major supermarket has opened delivery slots for shoppers today.

Asda has opened up the slots for customers without a delivery pass.

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Customers who have a delivery pass have been able to book in slots since last Tuesday, October 15.

A delivery pass is a monthly or yearly membership that, if used enough, can give you a discount on your delivery.

Be wary though as you only tend to make a saving if you shop at one specific retailer regularly.

The UK’s third-biggest supermarket said over one million home delivery and click-and-collect slots will be available in total.

The minimum spend is £40 for delivery and £25 for click-and-collect, but that should be easy to reach if you’re doing your Christmas shop in one go.

Shoppers can also make changes or add any products to their basket up until 11pm the night before delivery or collection.

What other supermarkets are doing

Morrisons

Customers with a delivery pass have been able to book their slots since October 2.

Those without one have been able to book slots from October 9.

All shoppers need to spend at least £25 before they can check out an online order.

Those without a delivery pass will be charged between £1.50 and £6 to secure a one-hour delivery time slot.

It comes after Morrisons unveiled its Christmas food range.

Sainsbury’s

Sainsbury’s customers who have a delivery pass have been able to book since October 16.

Meanwhile, non-pass holders will be allowed to book slots from tomorrow, October 23.

Both can schedule deliveries for between December 18 – 24.

Customers can amend their baskets until 11pm the day before their order is due.

Tesco

Tesco is also giving customers who pay for an annual delivery pass first dibs on Christmas slots.

Delivery plan and click and collect delivery plan customers can book their slots from 6am on Tuesday, November 5.

This gives customers a one-week head start on regular shoppers, who will have to wait until November 12 to nab a slot.

But if you also want to get ahead of the game, you can still sign up to the relevant delivery plan by Monday, November 4.

Tesco delivery plans range from £3.99 a month to £7.99 a month, depending on what level of service you want.

The click and collect plan costs £2.49 a month.

Waitrose

The posh grocer has already allowed its customers to start booking slots for Christmas.

It costs £4 to book a slot and orders must be over £40.

But if shoppers are keen to get their Waitrose shop delivered to their home they should act fast as slots are filling up quickly.

Iceland

The major retailer’s service enables shoppers to pre-book and pay for their Christmas dinner and other festive treats in advance, which will then be delivered to their door five days later.

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Unfortunately for shoppers, the budget supermarket chain will not be offering its click-and-collect service for Christmas bookings.

It comes after Iceland unveiled its Christmas 2024 range which comes with a pigs in blankets Yorkshire pudding.

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.

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MUM of two Bryony Lewis has not looked back since getting a log burner fitted in autumn 2022. 

She reckons she’s already saved £2,000 on her bills since switching to burning wood instead of turning her heating on two years ago.

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The 40-year-old, who lives in a five-bed home in Fareham, Hampshire, with her husband, Dan, her son Theo, eight, and daughter, Izzy, six, runs her own e-commerce business, T & Belle, which sells gifts for parents.

That means she spends a lot of time working at home – and over the winter the heating bills rack up.

So a few years ago, she started looking into what she could do to reduce her bills, and found that log burners can be a great way to heat the whole house up for far less.

With energy bills having risen from October 1, when the price cap went up by 10%, Bryony is very glad she made the investment.

This move by Ofgem saw the average annual energy bill jump from £1,568 to £1,717, meaning households are set to fork out even more cash to heat their homes this winter.

Bryony said: “The cost-of-living continues to go up and gas and electricity bills are making an increasingly big dent in our finances. We are very happy we made the decision to find a cheaper alternative to central heating.”

According to Uswitch, the average household with typical consumption could pay around £226 on gas over three months (October to December) based on the current price cap unit rates. 

This is based on regulator Ofgem’s ‘breakdown of usage.’ But note that the cost for each household will vary based on a number of factors, such as type of home, energy performance certificate (EPC) rating, number of radiators and type of boiler. 

After getting a smart meter, Bryony calculated the family was easily spending upwards of £800 on central heating over six months.

How much did it cost to switch?

Bryony paid £800 for her log burner, plus around £1,000 to get it installed – but this included the cost of removing the family’s previous open fire place, so without that it would have been cheaper.

She said: “We paid around £800 for our ACR Woodpecker WP5 Plus – but as we’ve discovered, it doesn’t take too long to recoup the cost.”

Bryony opted for a modern multi-fuel burner, which is a more eco-friendly type that is approved for use in smoke-control areas.

Now, the only ongoing running costs are logs, kindling and firelighters, which has been far cheaper than running central heating.

Bryony said: “For the whole of the winter season last year – from October to March – we spent a total of £100 on those three items,” she said.

One of Bryony’s top tips is to invest in good-quality kiln-dried logs.

“Doing this means the unit gives out a lot of heat,” she explained.

When buying logs, remember to look out for the “Ready to Burn” logo, a scheme that certifies solid fuels for burning in England. 

The only other associated cost Bryony needs to budget for is getting the chimney swept regularly. 

She said: “We last did this last in September and it cost us around £60.”

If you’re looking for a qualified individual locally, the National Association of Chimney Sweeps (NACS) is a good starting point. Also get your burner regularly serviced to keep it in tip-top condition. 

When getting any wood-burning appliance installed, you must always use a qualified tradesperson, such as a HETAS-registered installer.

And make sure you’re up to speed on wood burning stove winter rules – read more here. 

“Even on the coldest days, we only put it on for a maximum of one hour in the morning and the same before bedtime, despite the fact I work from home.”

Other energy-saving measures

Investing in a log burner is not the only energy-efficient change Bryony has made at home. 

“Our smart meter showed me that the oven was another energy-guzzling appliance,” she said.

“So, after researching the alternatives, I invested in an air fryer. This was back in 2022, and we have made really good use of it since then.”
The family went for a 7.6-litre Ninja Dual model. 

“As a family, we do a lot of things to try to be more efficient,” said Bryony. “We take care to always switch appliances off at the plug, as leaving devices on standby can cost a small fortune.”

Figures from Quotezone suggest households could save around £80 a year by switching off  ‘vampire’ appliances such as gaming consoles, computers, laptops, and speakers, as well as dishwashers, washing machines, tumble dryers, microwaves, coffee makers and TVs.

Bryony added: “Other steps we take to save on energy costs include replacing all our lightbulbs with energy-saving ones.”

A WARNING has been issued over an easy state pension mistake that could mean you miss out on £3,900.

Deferring your pension is often seen as an easy way to boost your savings pot when you do decide to retire.

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That’s because for every year you delay, you boost your pension by just under 5.8%.

But for some, it might be a big mistake, because it may then put you over the threshold for Pension Credit – a handy benefit worth up to £3,900 a year which also unlocks the Winter Fuel Payment.

The Sun was inundated with calls from hard-up pensioners during its Winter Fuel SOS phone-in last week who fear they will be unable to heat their homes without the payment this year.

Many had been disappointed to find that because they had put off taking their state pension, they were now over the limit for Pension Credit.

Now, people who might find themselves in the same position are being urged to not take the decision lightly.

The single-person Pension Credit rate is £218.15, while the full new state pension is £221.20 so if you get the full amount then you already are over the threshold.

The people who would be affected by this are those who get less than the full amount of state pension, due to the number of “qualifying” National Insurance years they have.

However, if your pension is below the full rate then if you take it on time you might get Pension Credit – as well as the WFP and cold weather payments.

Under current rules, you need 35 qualifying years to get the full amount of state pension.

For example, someone who has 34 qualifying years gets 34/35 of a full pension or £214.88.

If this person takes their pension on time, they are entitled to Pension Credit and everything that comes with it. We have explained all the perks you can get here.

But, if they defer for just one year, the extra 5.8% takes them up to £227.34 per week – above the Pension Credit level.

So, this means they then lose out for good on all the extras that come with Pension Credit.

Former pensions minister and partner at LCP told The Sun that “the lesson to learn” is that if your state pension is short of the full amount and you might therefore otherwise qualify for Pension Credit in retirement, “you should think very hard before deferring”.

He also pointed out that those who are perhaps working past pension age might think of deferring their pension for tax reasons.

This group could inadvertently end up worse off than if they had simply taken their pension on time.

Mr Webb said: “Not everyone takes their state pension as soon as they reach pension age, and the reward for deferring is an extra 5.8% on your pension for each year you defer.

“But for people whose pension is short of the full amount, there can be a sting in the tail.

“If your normal pension figure is below pension credit then claiming at retirement means you will get a top-up and all the extras which come with pension credit such as keeping your winter fuel payment.

“But if you defer even for one year, you might find your pension is now over the pension credit line and that you have lost all of that additional help – potentially for the rest of your retirement.”

Mr Webb believes that the Department for Work and Pensions (DWP) should flag to people who are thinking of deferring that they need to “think very carefully about the potential knock-on effects” of benefit entitlement before they make a decision.

If you’re not sure if you will be able to get Pension Credit, you can use our handy tool to check what benefits you’re eligible for.

What is Pension Credit and who is eligible?

Pension Credit is a government benefit designed to top up your weekly income if you are a state pensioner with low earnings.

The current state pension age is 66.

There are two parts to the benefit – Guarantee Credit and Savings Credit.

Guarantee Credit tops up your weekly income to £218.15 if you are single or your joint weekly income to £332.95 if you have a partner.

Savings Credit is extra money you get if you have some savings or your income is above the basic full state pension amount – £169.50.

Savings Credit is only available to people who reached state pension age before April 6, 2016.

Usually, you only qualify for Pension Credit if your income is below the £218.15 or £332.95 thresholds.

However, you can sometimes be eligible for Savings Credit or Guarantee Credit depending on your circumstances, even if you’re over these limits.

For example, if you are suffering from a severe disability and claiming Attendance Allowance, as well as other benefits, you can get an extra £81.50 a week.

Meanwhile, you can get either £66.29 a week or £76.79 a week for each child you’re responsible and caring for.

The rules behind who qualifies for Pension Credit can be complicated, so the best thing to do is just check.

You can do this by calling the Pension Service helpline on 0800 99 1234 from 8am to 5pm Monday to Friday or by using free online calculators.

Those in Northern Ireland have to call the Pension Centre on 0808 100 6165 from 9am to 4pm Monday to Friday.

It might be worth a visit to your local Citizens Advice branch too – its staff should be able to offer you help for free.

Pension Credit is known as a “gateway” benefit which means it opens up a host of perks, like theWinter Fuel Payment and a free TV licence if you are 75 or over.

It also unlocks discounts on your council tax and the Warm Home Discount, if you are on the Guarantee Credit part of the benefit.

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.

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