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Have you considered a Charter for dealing with vulnerable clients?

We make no apologies for revisiting the subject of vulnerability, a subject we at Matrix Capital take extremely seriously, and of course one that both our respective regulators do as well. Indeed, as you probably know by now, supporting clients in vulnerable circumstances is a specialism for us.

Legal Services Board research 2022

It was just over 2 years ago that your oversight regulator, in its research paper into how the law firms identified and supported clients in vulnerable circumstances, labelled much of the profession as ‘cold and clinical’ and urged the frontline regulators to address how firms improved in this arena. The LSB went as far as to suggest that most consumers who need to approach a lawyer, will be, by definition, vulnerable.

How can you support the needs of vulnerable clients?

We were prompted to return to this important topic by an excellent piece, written for the Law Society, by two prominent solicitors, Heledd Wynn, a good friend to Matrix Capital, and Fiona Heald ahead of their session with the above title at the Law Society Private Client Conference last month.

The article counters a popular contention that vulnerability only impacts those who are injured and unwell and outlines 4 main issues that might be encountered by consumers requiring legal advice.

  1. Capacity and decision making – Does the client have the mental capacity to understand your advice and make an informed decision?

  2. Undue influence and coercion – Vulnerable clients might be more susceptible to undue influence from family members, care givers, or others in authority.

  3. Communication barriers and access to legal services – Are there physical or financial constraints to seeking legal advice and are your communications in plain language and jargon free?

  4. Safeguarding against financial exploitation – This is hugely significant for vulnerable clients, particularly in matters related to wills, trusts, attorneyship and property.

Third party due diligence.

It is the 4th point around safeguarding your clients from potential financial exploitation that leads us onto how vital it is that your firm has undertaken thorough due diligence on any third parties your lawyers need to work with where there is a financial aspect or complementary financial planning required. Matrix Capital is a trusted third party with a highly experienced and qualified team but when dealing with clients in vulnerable circumstances you MUST be convinced of that and be able to reassure your client as to why this is the case.

The Financial Vulnerability Taskforce Charter.

How we, as financial planners, deal with vulnerability is covered rigorously by the FCA’s Consumer Duty, and at Matrix Capital, as we have mentioned previously, were early adopters of the Consumer Duty Alliance’s (CDA’s) professional standards and their Financial Vulnerability Taskforce Charter.

The Consumer Duty Alliance CIC, as non-profit organisation established to help financial planning firms embrace and implement Consumer Duty, which has a huge emphasis of how we identify, support and advise clients in vulnerable circumstances.

However, in the latter part of 2023, assisted by Dave Seager, our Consulting Adviser, the CDA adapted the charter so it was appropriate for and could be adopted by any professional firm working, not only in the UK personal finance but equally in the legal and accountancy sectors.

The Consumer Duty Alliance’s resources.

We would encourage you to look at the charter in the link above and hope that you might adopt it. This will demonstrate to the Solicitors Regulation Authority, your existing clients and importantly potential new clients researching your firm and services, how serious your firm is when it comes to vulnerability and advising clients in vulnerable circumstances.

The CDA also has some valuable resources and guides which can be downloaded for free here. The guides are well researched and written and cover areas that staddle legal and financial where clients will often feel vulnerable such as divorce, LPAs, and sudden wealth.

Matrix Capital has fully embraced the charter and what it means for all our staff, financial planning and support team, and how they identify, communicate and work with vulnerable clients. We would love to discuss with you, the reassurance it will offer to any vulnerable clients you refer to us.

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