Embarrassment ‘stops vulnerable people opening up’

Financial services firms have been urged to do more to encourage vulnerable people to open up.

According to Smart Money People, more than two-thirds (68%) of vulnerable customers haven’t told their bank or credit provider about their situation, often because of stigma and embarrassment.

People aged 55 and above are particularly likely to keep quiet, as figures showed that 80% have never made their circumstances known.

But encouragingly, more than half (52%) of those who did tell a financial provider about their situation got better treatment as a result.

Smart Money People is now urging firms in the sector to address this problem and “do more than just meet regulatory requirements”.

“They need to create an environment where customers feel safe to speak up, are aware that support is available and are clearly guided to the help they need through better signposting and education,” it said.

Many people don’t even realise they’re vulnerable

Another big problem is that people don’t always recognise that they might be vulnerable.

The Financial Conduct Authority (FCA) defines a vulnerable customer as someone who, due to personal circumstances, is more likely to experience harm - especially if financial providers don’t handle things with proper care.

This could be because of factors such as:

• health problems
• life events, including bereavement, redundancy and divorce
• difficulty coping with financial or emotional shocks
• limited financial knowledge
• poor literacy
• low digital skills
• low confidence in managing money

But according to Smart Money People, around 11 million UK adults who fall under this definition don’t identify that way.

That’s 40% of the 26 million people the FCA could classify as vulnerable.

Tough times make it harder to manage finances

Upheavals such as job loss, the death of a loved one or illness can make it so much harder for a person to manage their finances.

Figures show that one in six (16%) people struggle to make good financial decisions during difficult times, while one in seven (14%) say personal challenges distract them from managing money at all.

As a result, many vulnerable people could be at risk of missing payments and falling behind on bills - and might not actively reach out for help when things start to spiral.

Help is available

We’re here to help you take control of your finances, even in the toughest of circumstances, so please don’t hesitate to get in touch for practical, impartial advice.

We can check you’re getting all the benefits you’re entitled to and help you create a realistic budget.

And if you owe money and are struggling with repayments, we’re here to give you debt advice.