Vulnerability management presents an opportunity for advice firms to strengthen client relationships, says the Chartered Insurance Institute.
The new CII Consumer Duty, Proportionality and Vulnerability Management for Financial Planning Firms Roundtable summary report showed effective vulnerability management can support firms in expanding their potential client base.
In addition, it can reduce the cost of ad hoc vulnerability handling and support firms in evidencing value to clients and regulators and building long-term consumer trust, the report found.
With ‘demonstration of how firms are delivering good customer outcomes’ identified as a key supervisory priority for the Financial Conduct Authority in 2026, the report outlines four core principles for determining the right proportional level of Consumer Duty implementation and vulnerability management. These include size of firm; role in distribution chain; characteristics of client base; and risk level of product or service.
The report concludes that firms should measure the same outcomes for vulnerable and non-vulnerable clients and track the additional support provided to achieve those outcomes. Evidence of good outcomes throughout the journey, not just at the endpoint, and building robust vulnerability data infrastructure were highlighted as essential prerequisites for meaningful outcomes comparison, the CII said.
The report also outlines three indicators of when firms may not be doing enough to effectively manage vulnerability. These include a ‘one-size-fits-all’ vulnerability process, cultural resistance and opaque outcomes monitoring systems that cannot identify whether different client groups are receiving good outcomes.
Matthew Hill, chief executive at CII, said: “Vulnerability management is often viewed as a regulatory burden or an added cost, while it is in fact an opportunity for firms to strengthen client relationships, demonstrate tangible value and build lasting trust.
“By adapting a proportionate and practical approach, firms cannot only meet regulatory expectations but also broaden their reach, improve efficiency and deliver consistently better outcomes for all customers.”
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