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FinCom Bench

Sourcebooks / Vulnerable customers

Vulnerable customers

United Kingdom

UK — Vulnerable customers

Source: FCA Finalised Guidance FG21/1 (vulnerable customers) and FG22/5 (Consumer Duty). FG22/5 itself says FG21/1 "remains relevant" and that the Duty's vulnerability references are "consistent with and informed by" FG21/1 — both are kept here for that reason.

FG21/1 para. 1.1

Verbatim clause withheld — the publishing authority's reuse terms do not confirm a right to redistribute the exact text (see sourcebooks/NOTICE-SOURCEBOOKS.md). See the URL above for the original, and "What this means" below for Doshi's own paraphrase.

What this means. The FCA defines a vulnerable customer as someone who, because of their own circumstances, is more likely to be harmed if a firm does not take proper care. This definition sits behind the Consumer Duty's rules on vulnerable customers. The definition is deliberately circumstance-based, not label-based — it does not name fixed groups like "the elderly" or "the disabled". Anyone can become vulnerable temporarily, for example after a bereavement or a job loss, and a firm's duty of care tracks the circumstance, not a permanent category.

FG22/5 para. 1.26

Verbatim clause withheld — the publishing authority's reuse terms do not confirm a right to redistribute the exact text (see sourcebooks/NOTICE-SOURCEBOOKS.md). See the URL above for the original, and "What this means" below for Doshi's own paraphrase.

What this means. Under the Consumer Duty, firms must pay explicit attention to customers with characteristics of vulnerability. These customers may have added needs, or face a bigger risk of harm if something goes wrong. The Duty does not let firms treat all customers the same way by default. "Explicit reference" matters here: the Consumer Duty does not merely permit firms to consider vulnerability, it requires them to. A firm that applies one standard communication style to every customer, vulnerable or not, has not met this part of the Duty.

European Union

EU — Vulnerable customers

Source: Unfair Commercial Practices Directive (2005/29/EC), art. 5(3). Different paragraph from UCPD arts. 6-7, already in rules/grading/product_recommendation.md.

Note: fetched via legislation.gov.uk's EU-retained-law mirror, not eur-lex.europa.eu directly (eur-lex returned empty content on every attempt). See sourcebooks/suitability/eu.md for the full caveat.

UCPD art. 5(3)

Commercial practices which are likely to materially distort the economic behaviour only of a clearly identifiable group of consumers who are particularly vulnerable to the practice or the underlying product because of their mental or physical infirmity, age or credulity in a way which the trader could reasonably be expected to foresee, shall be assessed from the perspective of the average member of that group.

What this means. If a practice or product targets a group that is vulnerable because of mental or physical condition, age, or credulity, the law judges the practice from that group's point of view, not from the average consumer's point of view. The foreseeability condition is what limits this article — a trader is judged against the vulnerable group's perspective only when it could reasonably have expected that group to be affected, not for every conceivable vulnerable reader of a general-audience message.

United States

US — Vulnerable customers

Source: FINRA Rule 2165 (financial exploitation of specified adults).

FINRA Rule 2165(a)

Verbatim clause withheld — the publishing authority's reuse terms do not confirm a right to redistribute the exact text (see sourcebooks/NOTICE-SOURCEBOOKS.md). See the URL above for the original, and "What this means" below for Doshi's own paraphrase.

What this means. FINRA Rule 2165 names a "Specified Adult" as a customer age 65 or older, or an adult with a mental or physical impairment that stops the person from protecting their own interests. The rule defines "Financial Exploitation" as the wrongful taking of that customer's money, or control gained through deception or undue influence. The age-65 category needs no impairment finding at all — it applies by age alone. The impairment category has no fixed age floor, so an 18-year-old with a qualifying impairment is a Specified Adult under this rule.

FINRA Rule 2165(b)

Verbatim clause withheld — the publishing authority's reuse terms do not confirm a right to redistribute the exact text (see sourcebooks/NOTICE-SOURCEBOOKS.md). See the URL above for the original, and "What this means" below for Doshi's own paraphrase.

What this means. A firm can pause a payout from a senior or impaired customer's account if it suspects exploitation. The pause has fixed time limits, and the firm must tell relevant parties within 2 business days. The hold expires after 15 business days unless a regulator, a court, or the firm itself extends it. The "reasonable belief" bar is deliberately low — the rule does not require the firm to prove exploitation before acting, because waiting for proof is exactly what lets an exploiter drain the account in the meantime.

Australia

Australia — Vulnerable customers

Source: ASIC RG 271 (internal dispute resolution).

RG 271.133–134

Firms should also implement proactive and innovative approaches to promoting awareness about the IDR process and sourcing complaints from vulnerable people and groups. [Enforceable paragraph RG 271.134] The IDR process must be easy to understand and use, including by people with disability or language difficulties.

What this means. A firm's complaint process must be easy for vulnerable people to find and use. This duty is enforceable, not just good practice. RG 271.133 asks firms to be proactive — actively promoting the complaints process to vulnerable groups — while RG 271.134 is the enforceable floor underneath it: even a firm that skips the proactive part must still meet the baseline of an accessible process.

RG 271.158

When a complaint is received, complaint management staff should assess and prioritise complaints according to the urgency and severity of the issues raised. Example of matters that should be prioritised include where: (a) the complainant is experiencing domestic or financial abuse; (b) the complainant has a serious or terminal illness; or (c) a delay in addressing the complaint could adversely affect the complainant's basic living conditions.

What this means. A firm must move a vulnerable customer's complaint to the front of the queue. Examples include domestic abuse, terminal illness, or risk to basic living conditions. The examples ASIC gives are not exhaustive — "urgency and severity" is the actual test, and a firm has to apply that test to circumstances beyond the 3 named examples, not treat the list as the only qualifying situations.