What is a vulnerable customer?
A vulnerable customer is someone especially susceptible to harm, particularly where a firm is not acting with appropriate care. The FCA identifies four drivers: health, life events, resilience and capability. Vulnerability may be temporary, fluctuating or permanent.
It is a circumstance, not a category. Bereavement, divorce, a diagnosis, redundancy or caring responsibilities can make anyone temporarily vulnerable, including confident and financially sophisticated clients. Around half the UK adult population shows at least one characteristic at any time.
The FCA's guidance sets expectations on understanding needs, staff capability, product design and communications, and the Consumer Duty ties all of it to outcomes monitoring rather than intention.
The operational challenge is recognition and recording. Vulnerability surfaces through life events, and life events surface in the client's own information long before they surface in a review meeting.