Vulnerable Consumer Policy
AIM OF THIS POLICY
The aim of this policy is to outline the practice and procedures for staff in LK Performance LTD to contribute to the prevention of detriment to clients who find themselves in vulnerable circumstances.
The policy covers all staff and areas of work directly with the customer.
DEFINITION OF VULNERABLE
The Financial Conduct Authority in its publication “Consumer Credit and Consumers in Vulnerable Circumstances” of April 2014 (pub ref 00489) defines consumers in vulnerable circumstances as follows:
“We consider a vulnerable consumer to be someone who, due to their personal circumstances, is especially susceptible to detriment.” With the most significant detriment occurring when, “…through the use of consumer credit, they get into unmanageable or problem debt.
LK Performance LTD Limited is a credit broker, not a lender and is authorised and regulated by the Financial Conduct Authority (FRN 670680).
Clients who might be considered as being in vulnerable circumstances could include:
1. Clients with mental capacity deficiencies (including language or communication)
2. Clients who are “underbanked” or “financially unsophisticated”
3. Clients with low income
4. Clients already in a distressed financial situation
The nature of LK Performance LTD Limited business makes it unlikely that new customers will be in vulnerable circumstances or that the nature of their circumstance may limit or remove the availability of facilities to the extent that the firm might be unable to accommodate their requirements.
We must however remain mindful of the potential for enquiry by these clients and the potential for any change of circumstance in respect of existing customers.
IDENTIFICATION OF CLIENTS IN VULNERABLE CIRCUMSTANCES
1. Mental capacity deficiencies - The FCA provides clear guidance on the identification of mental capacity issues in its Handbook under CONC 2.10.8 Appended to this policy,
2. Underbanked, Financially Unsophisticated -can be identified through interview and credit profile
3. Low income - can be identified through interview and credit profile
4. Financial Distress, can be identified through interview and credit profile
5. The nature of the need area to be addressed, for example, in connection with arranging mortgages and/or home finance, equity release, sale and rent back, right-to-buy, or where the main purpose of raising funds is to consolidate debt, or advising on and / or facilitating the provision long-term care.
ASSESSMENT AND MANAGEMENT OF RISK
LK Performance LTD Limited will not discriminate against clients in vulnerable circumstances by way of adjustment to fees or any refusal to assist purely on the grounds of the client’s circumstance (unless that circumstance creates a situation which is likely to lead to detriment or a risk that removes the availability of any finance facility).
The following table illustrates mitigating actions for clients with mental capacity deficiencies (for the avoidance of confusion “competent person” means an individual without the limitation presented by the client
|
Capacity Issue |
Risk |
Mitigation |
|
Language |
Client cannot fully understand important features of their agreement with LK Performance LTD Limited their recommendation or the consequences of that recommendation |
Client to instruct a competent person to act as interpreter. |
|
Other communication problem created by disability |
As above |
|
|
Mental incapacity (temporary) e.g. intoxication, mental illness |
As above plus the potential for reckless disregard for consequence |
|
|
Mental incapacity (Permanent) |
As above plus the possibility that any agreement might be unenforceable as a result of known incapacity. |
Client must provide “Power of Attorney” to a competent individual to act on their behalf |
RIGHTS & RESPONSIBILITIES
Responsibilities of LK Performance LTD Limited
1. To ensure staff are aware of this policy and are adequately trained once per quarter
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 circumstance
Responsibilities of LK Performance LTD Limited employees
1. To be familiar with this policy and procedures
2. To take appropriate action in line with the policies of LK Performance LTD Limited
3. To report any instance where they believe that a client might be in a vulnerable circumstance.