Wealth Management and Private Banking

10 June 2021

AdviceClientCommunicationcomplianceEngagementFCAJourneyRegulationTrainingVirtualVulnerableVulnerable clientWealth Management and Private BankingWealth Management and Private Banking

Experts: Jessica Reed, Richard McDermott, Charlotte Fraser, Partners from Farrer & Co and Facilitator: Martyn Laverick Divisional Director M&A, Paul Harper Search and Selection

 Key Takeaways:

  1. The FCA’s guidance should be viewed as a de-minimis.
  2. Staff training and record keeping essential
  3. Capacity Assessment is becoming part of the advice process
  4. If you do not consider vulnerability you are not treating customers fairly
  5. Client engagement on this topic is key 


1. The FCA’s guidance should be viewed as a de minimis

A point that was reinforced during the session by the Partners at Farrer was that organisations need to go beyond the current FCA guidance in order to protect the client and themselves. Given the increase in individuals that are classified as potentially vulnerable organisations must be able to identify this. In addition, vulnerability can be a temporary position so organisations must look for it in all cases. Firms must be able to demonstrate they have provided that extra level of care regarding in regard to protecting the client as Private Banks and Wealth Management Clients have deep pockets for litigation.

2. Staff training and record keeping essential

Many firms were able to point out training that had been delivered to their staff and in some cases, this was pulled in via bodies that are recognised in this area. Larger firms had built internal specialist teams that dealt with this area. It was also advised that where this subject is discussed internally, either about a client or in relation to the business as a whole a record of this should be made. One of the comments made was that this skill was often best learned by shadowing a senior member of the team as part of a training package.  

3. Capacity assessment is becoming part of the advice process

A view given by the experts was that where a significant decision is being made by the client, regardless of the situation it is advisable that a capacity assessment is carried out as part of the advice process. The feedback was that this course of action is well received by the client and discussing this with the client should not cause concern.  The outcome is that this approach made the advice steps undertaken bullet proof to future claims that the client was not in a fit state to make the decision. This needs to be carried out by a specialist psychiatrist and ideally one that has court experience as this could be called upon.

4. If you do not consider vulnerability, you are not treating customers fairly

Vulnerability and TCF and very much linked but vulnerability can be an ever-moving issue. You need to have a constant eye on how the client could be susceptible to harm. Could this be health issues, recently highlighted by the pandemic, financial issues bought on by external pressures, exploitation by family members, life events such as divorce, the list is very large. In addition, there will be times when a client could need protecting from themselves. Vulnerability is not a one-off event and a client could find themselves in a vulnerable position on a temporary basis which would need to be recognised. It was suggested that this should be checked with all clients on the annual suitability review.

5. Client engagement on this topic is key

When dealing with client’s firms need to plan ahead as much as possible and build in steps that will make the provision of advice easy to deliver regardless of the situation of the client. Start having conversations around this subject with clients to get them used to how this will benefit them.  One suggestion was to encourage clients to nominate a second name on their accounts to help with access to funds etc in the event that the client is incapacitated. This could also be a temporary signature to help clients for example if they were going into hospital for a given period of time. The earlier that clients are bought into why this will benefit them the better.