Vulnerability Policy

 

Aim of this policy

The aim of this policy is to outline the practice and procedures for all staff at Optimus Mortgages Ltd to contribute to the prevention of detriment to clients who find themselves in vulnerable circumstances.

Our desired outcome is to ensure vulnerable consumers achieve outcomes as good as those of other consumers. We want to be confident that vulnerable consumers are not exploited or targeted with poor-value products and services, and that access to key products and services is fair.

This policy covers all staff within Optimus Mortgages Ltd, and in particular those operating in areas that deal directly with clients.

 

Definition of vulnerable

The Financial Conduct Authority (FCA) has developed the following definition to guide work in this area:

“We define a vulnerable consumer as someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care.”

 

Vulnerability occurs in a variety of ways, which may be permanent, temporary, or even sporadic, dependent on its nature. In many circumstances the individual may not recognise themselves as ‘vulnerable’.

 

We recognise that vulnerability may not be simply due to the situation of the client but caused or aggravated by the actions or processes of the firms they may deal with.

 

Drivers of vulnerability

The FCA have identified four key drivers which may increase the risk of vulnerability. These are:

  1. Health – Disabilities or illnesses that affect the ability to carry out day-to-day tasks.

  2. Life events – Major life events such as bereavement, job loss or relationship breakdown.

  3. Resilience – Low ability to withstand financial or emotional shocks.

  4. Capability – Low knowledge of financial matters or low confidence in managing money (financial capability) and low capability in other relevant areas such as literacy, or digital skills.

Clients who might be considered as being in vulnerable circumstances could include, but are not limited to:

  1. Clients with mental capacity deficiencies (including, but not limited to, language and communication), including mental illness and dementia.

  2. Clients under stress or subject to financial shock of all types, such as employment concerns, bereavement (or potential bereavement), marital or relationship difficulties.

  3. Clients with a physical impairment that may not allow them to engage with automated, or other standard process requirements (such as photographic ID, phone keypad recognition, or internet applications).

  4. Clients with severe and long-term illness (both life-limiting and where recovery is expected).

  5. Clients who are ‘under banked’ or ‘financially unsophisticated’.

  6. Clients with low income.

  7. Clients already in a distressed financial situation.

  8. Those acting on behalf of clients as carers, including those operating a Power of Attorney.

  9. Clients without access to the internet or other digital media.

  10. Clients who are financially inexperienced.

  11. Clients with poor language skills.

  12. Clients aged 75 years and over or clients aged 18 years and under.

Optimus Mortgages Ltd remains mindful of the potential for enquiry by these clients, and the potential for any change of circumstance in respect of existing clients.

Identification of clients in vulnerable circumstances

Vulnerability is broad and may occur at any time. It will usually involve the interplay of characteristics of the individual, their circumstances, and static, or transitory status.

Optimus Mortgages Ltd may only deal with clients in vulnerable circumstances where we are aware of their needs.

  1. Clients with mental capacity deficiencies – The FCA provides clear guidance on the identification of mental capacity issues in their Handbook, especially under CONC 2.10.8 appended to this policy.

  2. Clients under stress or subject to financial shock – May be identifiable (facial expression, posture, stance etc.), but otherwise may be revealed through conversation before and during interview.

  3. Clients with a physical impairment – May be identified visually or through interview.

  4. Clients with severe and long-term illness - May be identified visually or through interview.

  5. Clients who are ‘under banked’ or ‘financially unsophisticated’ - May be identified through interview or their credit profile.

  6. Clients with low income - May be identified through interview or their credit profile.

  7. Clients already in a distressed financial situation - May be identified through interview or their credit profile.

  8. Those acting on behalf of clients as carers, including those operating a Power of Attorney - May be identified through interview or conversation.

  9. Clients without access to the internet or other digital media - May be identified through interview or via routes of engagement with Optimus Mortgages Ltd.

  10. Clients who are financially inexperienced - May be identified through interview or their credit profile. Age may be a factor in exposure to financial products.

  11. Clients with poor language skills - May be audible or identified via routes of engagement with Optimus Mortgages Ltd.

  12. Clients aged 75 years and over or clients aged 18 years and under – Opportunity to have a trusted friend or relative present at the appointment to assist them.

 

Our treatment of vulnerable clients

The nature of the need area to be addressed, for example, in connection with arranging mortgages and/or home finance, equity release, home reversion schemes, or where the main purpose of raising funds is to consolidate debt, or advising on and/or facilitating the provision of long-term care may also indicate vulnerability. Here additional safeguards will be applied as appropriate to ensure fair treatment.

Optimus Mortgages Ltd will classify all equity release customers as ‘vulnerable’, as required by the regulator.

All equity release clients must be provided with advice in the first instance.

We will ensure that sufficient customer information is gathered and recorded and the file will evidence the additional care taken to ensure that the risks and features of the recommended product are fully understood. 

We will give all such clients the opportunity to have a trusted friend or relative present at the appointment to assist them. This offer will be recorded on the file and the presence of a third party recorded in the fact find and suitability report so that it is clear to a third party viewing the file that the customer has been afforded every level of protection.

If our client is mentally incapacitated and not able to make decisions for themselves, advice will be given to an attorney or court appointed deputy and a full copy of the registered enduring/lasting power of attorney or deputy order will be retained on file.  Where the advice is given to the attorney or deputy, the file will evidence that the advice is based on the requirements, circumstances and assumed risk profile of the customer.

Optimus Mortgages Ltd will not discriminate against clients in vulnerable circumstances by way of adjustment of fees, or any refusal to assist purely on the grounds of the client’s circumstances (unless that circumstance creates a situation which is likely to lead to detriment or a risk that removes the availability of any finance facility).

Responsibilities

Responsibilities of Optimus Mortgages Ltd:

  1. To abide by the FCA’s principles and rules in this area.

  • FCA Principles for Business

  • ICOBS 2.2.2 and 6.1.5

  • Individual conduct rules (Treating Customers Fairly)

  1. To ensure staff are aware of this policy and are adequately trained to identify and deal with clients who are, or may appear, ‘vulnerable’.

  2. To support individuals in relation to identified risk and vulnerability.

  3. To provide means of reporting any instance where they believe that a client might be in vulnerable circumstances.

  4. We will review our practices periodically for consistency and to determine adherence to the stated policy.

Responsibilities of Optimus Mortgages Ltd employees:

  1. To be familiar with this policy and procedures, and to be able to recognise where additional support or signposting to other agencies may be required.

  2. To take appropriate action in line with the policies of Optimus Mortgages Ltd.

  3. To report any instance where they believe that a client might be in vulnerable circumstances, and act accordingly in line with the policy.

 

Appendix

CONC 2.10.8 - Indications that a person may have some form of mental capacity limitation

firm is likely to have reasonable grounds to suspect a customer may have some form of mental capacity limitation if the firm observes a specific indication (behavioural or otherwise) that could be indicative of some form of limitation of the customer's mental capacity. Examples (amongst others) of indications might include:

 

  1. where a firm has an existing relationship with a customer, the customer making a decision that appears to the firm to be unexpected or out of character.

  2. person who is likely to have an informed view of the matter, such as a relative, close friend, carer or clinician raising a concern with the firm as to the capacity of the customer to make a decision about borrowing.

  3. the firm understands or has reason to believe the customer has been diagnosed as having an impairment which led to the customer not having had mental capacity for similar decisions in the past.

  4. the firm understands or has reason to believe the customer does not understand what the customer is applying for.

  5. the firm understands or has reason to believe the customer is unable to understand the information and explanations provided by the firm, in particular concerning the key risks of entering into the agreement.

  6. the firm understands or has reason to believe the customer is unable to retain information and explanations provided by the firm to enable the customer to make the decision to borrow.

  7. the firm understands or has reason to believe the customer is unable to weigh up the information and explanations provided by the firm to enable the customer to make the decision to borrow.

  8. the customer is unable to communicate a decision to borrow by any reasonable means.

  9. the customer being confused about the personal information that the firm requires, such as date of birth or address.

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