Kathryn (00:03):
Hi everyone. We’re on season five, episode 14, and I have Keith Richards with me from the Financial Vulnerability Task Force. Hi Keith.

Keith (00:11):
Hi Kathryn.

Kathryn (00:13):
Today we’re going to be talking about the Financial Vulnerability Task Force and what their goals are for advisors and consumers. This is the Practical Protection Podcast. So before we get into everything properly, Keith, how are you doing today? Have you got sunshine? Have you got a nice weekend planned?

Keith (00:33):
I’m great Kathryn. It’s, the sun is shining outside and looking forward to a relaxing but busy weekend.

Kathryn (00:40):
Yes. It’s always that isn’t, it’s relaxing but busy. It’s one of those things I always think to myself, you know, it’s going to be a lovely, a lovely relaxing weekend. And then obviously I remember I have three young kids and you think, no, it’s, it’s not going to be relaxing at all. It’s quite intense.

Keith (00:55):
Yeah. Well, I think we’re trying to catch up now on the fact that things almost feel like they’ve returned back to normal, so yeah, lots more social events, lot more family. And of course, lots of DIY that’s been left outstanding.

Kathryn (01:08):
Oh, oh absolutely. Well, I was going to say, well, I say absolutely. I, I won’t be doing the DIY I’m, I’m that annoying person who starts a project. And then I look at my husband and go, Alan, and then just, I then go on, walks off and do something else while he then is left to <laugh> to try and help and salvage, whatever I’ve done. Okay. <Laugh>, let’s get straight into things then. So I think it’s a good idea to start off Keith, I know quite a lot of our listeners. Will know who you are. But if you can give us a bit of background about yourself, please, and then how it is that you are now with the Financial Vulnerability Task Force.

Keith (01:41):
Yeah, absolutely. I, I mean, I’ve spent pretty much most of my working career in financial services started over 40 years ago in in traditional as it would’ve been in those days insurance, composite life companies I’ve been in advised roles. I’ve got onto the retail board for Royal London Group, was Head of Retail. And then also moved into, become a Director, Key Director for Tenet Group. In the days when Tenet probably had nearer four or 5,000 intermediaries under its various brands helped blocks of businesses set up their own independent IFA businesses over that period. And just on the back end of 20 or just as the retail distribution review was introduced in 2013 I took on the role of CEO of the Personal Finance Society. So for many, they were slightly surprised given that I’d been around the market for some time and they couldn’t quite work out why I’d moved to a professional body when they thought the professional body was just about qualifications and that had all been done.

Keith (02:54):
Anyone who needed to, to be diplomed, it kind of happened. So and of course at that time there was a, a large mainly most experts were predicting a, a 60% attrition rate as a direct result of the regulatory reforms that we were refer to as the RDR not least because of course the abolition of commission and transfer to fee only. But I was never that skeptical. I, I had a lot of confidence and faith in the market and I, I guess having a broad experience operating at executive level, both in composite life companies, major IFA businesses and networks gives you a slightly different perspective on the market. And often there’s a lot of confusion about the dynamics of how big firms operate versus small firms. And of course the advice sector is made up predominantly small firms.

Keith (03:47):
So over 5,000 small firms, probably on average size of about five employees per firm. Compared to, of course, if you take the life company sector, then that’s a smaller number of very large and often global companies with thousands of employees. So the dynamics are very different. But it’s been a fascinating career because I’ve largely been at the heart of quite a number of the reforms I can go back to before regulation was introduced to the sector. In fact, I was a committee member for the Association of British Insurers back in those days, which was sort of a pseudo regulator for the insurance sector. And in fact I was invited to do radio shows for BBC Cambridge back in my very early, early days. In those days, it was predominantly talking about household claims, motor insurance, travel insurance and, and so on, but of course savings and protection.

Keith (04:46):
And in particular retirement pensions were becoming a big thing back in the in the eighties. So that, that occupied a lot of my time. So it’s been a very broad journey. How did I get to the Financial Vulnerability Task Force? Well, it was simple in the eight and a bit years of leading the Personal Finance Society, I think our profession has come on leaps and bounds. I saw a massive change that PFS or growth in membership. We saw massive levels of growth in engagement from members and indeed regulators and government. In fact, I’ve had the privilege of being invited by government to, to have been on quite a number of working parties. I was only one of two from industry, so to speak that it was invited onto the government’s Pension Freedoms Implementation Group. And that gave me a lot of insights, but it also gave us an opportunity to raise the profile of professional advice not only to policyholders to sorry, policy makers, governments, regulators but also it did allow us to introduce some initiatives that went in front of the public, because raising professional standards is no good if no one knows about it.

Keith (05:57):
And that was clearly a, you know, key driver for me. We did something called the Pension Transfer Gold Standard. So I, I reached out to the a cross sector from trustees to regulators to even PI insurers to come together, to come up with a common theme that would build public trust. And we launched then under the Pensions Advice Task Force, something called Pension Transfers Gold Standard, although over two thirds of firms with pension permissions adopted the effectively the charter that we created under that, it was kind of a bit too late, because British Steel came along just shortly after. And of course we all know the, the significant impact that British Steel has had on effectively tarnishing the whole reputation of, of advice. So it’s not just those caught up in it. Yeah.

Keith (06:50):
There’s a general perception that anyone who transferred out of the safeguarded benefit was probably wrong. And that simply isn’t true, but perception becomes reality. So, we decided that the big focus that the regulator was, was turning their attention to was something called vulnerability. Now we all obviously recognised through COVID that there’s a lot of concern about mental health, mental wellbeing and the, the, the varying degrees of vulnerability that, that we all face in life at different times. It struck me that the regulators talk about vulnerable customer, but actually vulnerable customer carries with it a bit of a stigma. So, no one really wants to be considered a vulnerable customer. And in fact, I’ve come across lots of financial planners who actually don’t think they deal with vulnerable customers. So, it struck us that we needed to launch a completely independent task force.

Keith (07:46):
So, one that was not connected with any organisation, but one that could be adopted by any organisation. And it was about how we raise the profile, share good practice and start to create a community effect that addresses what the regulator sees as still underlying concerns about the way the market deals with people’s vulnerable circumstances. So it’s not just dealing with people who are vulnerable. So stereotypically those with, for example, age related, cognitive impairment, those with, with evident disabilities actually regulation for some time has been trying to address and get this the various sectors, whether insurance or financial advice to address vulnerabilities in a, in a more transparent way. Now they’ve done that initially through “Know Your Customer” they’ve done that through TCF – “Treating Customers Fairly” last year, they launched their final rules on the expectations of how to deal with vulnerable customers.

Keith (08:52):
And of course, we are now just grappling with the Consumer Duty. Now all of those wrapped into one thing. And that’s just how we, as professionals, as organisations deal with consumers who know far less about what we do. In fact, hopefully the reason they come to us is because we are the experts, but by definition, anyone who goes to an expert and knows less than the expert is potentially vulnerable, because they have no option, but to trust what the expert is saying. And I think for us, it’s just been very conscious of that. So, the Vulnerability Task Force was launched to create consumer charter and also to create a charter, sorry, a consumer guide and a charter which firms and individuals could adopt. But I’d like to point out the really important part of this is the charter has been created, which also has a logo that the doctors can use to demonstrate their commitment, to consume a TCF, et cetera. It’s not about talking about what the taskforce does, actually, the charter enables firms and individuals to talk about what they do and the firm, or individual’s commitment to how they deal with various vulnerable circumstances.

Kathryn (10:11):
Absolutely. I mean, obviously that sounds incredibly important. I know over the last couple of years, I’ve been invited to do some speaking events about speaking about vulnerability. And I think, I think a lot of the time people when they’ve been thinking about vulnerability especially from probably quite led by a compliance background, I imagine is generally being a case of right, is this person age 60 or over right. If they’re age 60 or over, and then there can sometimes be quite intense things in place like, you know, where you must have a signed letter to say that they have cognitive ability to understand. And I think it, it’s one of those things that I think advice can sometimes get a bit confused by as well, because, you know, obviously there are certain people who obviously over the age of 60 who maybe don’t have the cognitive function to really understand what’s happening with their finances.

Kathryn (10:56):
And then you can get other people in their seventies and eighties who are absolutely switched on. And then on the other side of things, you could have someone in their thirties, who’s not got the cognitive ability to be able to understand their finances. And I think one of the things that I’ve been feeling for quite a while is that in some ways it mirrors what you were just saying, then it’s kind of like where in some ways, where does vulnerability stop? Almost everybody has some level of vulnerability you know, an example, you know, it’s and I think, again, I think this is something where advisors can sometimes think, well, what do we do? Because, I mean, obviously I talk quite a bit about vulnerable client registers and the processes that you’d maybe take to make sure that you’re monitoring and, and making sure that people are being looked after properly.

Kathryn (11:35):
And it’s that kind of thing. Like, so where do we draw the line sometimes? Because, you know, if somebody comes to us and they have a mortgage, but they don’t have something like life insurance in place or potentially income protection in place, then in a sense they’re financially vulnerable and their family’s financially vulnerable. Because it’s, you know, there’s a huge liability there that might not get repaid if something happens to them on the mortgage side. And then if they’re not, well, then the home could be obviously the, the home could be at risk if they were unable to keep the mortgage payments so there’s so many aspects to it. And I think it’s brilliant that there is this task force here to like really help educate the consumers and the advisors on what to do. And I, I know you mentioned there’s a charter and it’s got nine key areas for firms to sort of like agree and uphold to. So to confirm that they’re supporting the Financial Vulnerability Task Force. Can you take us through these please?

Keith (12:23):
Yeah, of course. Absolutely. The I mean, I think that the really important thing to just reemphasise based on what you’ve said is that vulnerability actually, as a word, tends to put the, a process or a requirement into a tick box category in particular, a regulatory requirement. It’s not, it’s what we deal with every day. Every single person that we deal with will have a vulnerable circumstance either now or in the future. And very often both insurance and financial advice can help to mitigate vulnerable circumstances at various key stages in life. So what we should remember is, is that dealing with vulnerability, isn’t about just how we deal with people with identifiable vulnerabilities, such as age related, cognitive impairment, actually it’s how do you deal with a 30 year old who has clear saving objectives today, but actually may also have some objectives about life changes within two years.

Keith (13:24):
So their vulnerability is, they’re focused on dealing with an immediate need, but actually they will be unaware that if they have a life change that they’re planning for, for example, family or, or taking on a mortgage in two years’ time,sustainability of their savings goal may be impacted. And that’s where financial planners have to actually take that vulnerability into a case. So many wouldn’t consider looking at sustainability as addressing a vulnerability. But of course it is, if you don’t ask the questions about what the client’s goals and objectives are and what their plans are for the immediate future to assess not just suitability and affordability of any recommendation, but also the sustainability and impact that other life changing plans could have. So that’s somebody who’s perfectly cognisant, who’s healthy, who in every way and sense seems to be focused on the future. So, you know, how could they have any vulnerabilities? But actually we all face them. So I think that’s the really important part to say, Kathryn.

Kathryn (14:27):
Oh, absolutely

Keith (14:28):
For me and the taskforce actually we want to turn vulnerabilities into BAU. We want to turn it into business as usual and then translate it into language that’s relevant to financial planners that helps to raise the, the dial, if you like and deliver better outcomes. So, it shouldn’t be a tick box exercise. And I actually believe controversially that actually the better we are at dealing with regulatory concerns actually we are going to see an increase in need in demand for the services that we provide. So ultimately that what’s in it for me, well the better we become at addressing people’s vulnerabilities, the more business we’re likely to see flow our way.

Kathryn (15:13):
Absolutely. I mean, I think a very clear one there is to say, well, at some point, all of us will retire. You know, and straight away we’ve got a financial vulnerability, you know, we have to plan for these things. There’s, there’s no way of escaping that. And obviously, especially as well, if you look at all the statistics in terms of the likelihood of being diagnosed with certain health conditions now it’s, it’s phenomenal how much these things are happening. So, you know, it isn’t something that’s, I agree with you, it, isn’t something that’s out there for other clients that aren’t your own its everyone has to be, you know, has that potential and we should be looking at it. But yeah, I really can’t wait clear what the, the Charter’s nine key areas are.

Keith (15:52):
Absolutely. So, the, the, it was really important for us to develop a, a charter. We learned from past experience on, for example, Pensions Advice Taskforce to give people something, to hang their hats on. So, there’s lots of firms that really do lots of great work around client vulnerabilities, et cetera. And actually there’s lots of advisors who do address vulnerability, but they may not all necessarily be conscious of it. So they haven’t written down what they do. They just do it intuitively, instinctively and professionally. So it is kind of an unconscious behavior in the positive, but what is really important is to have something that gives you a track to run on. And the nine statements contained within our charter underpin the work of the Financial Vulnerability Task Force. And we expect that our supporters will make a commitment to enact and actively support them.

Keith (16:50):
Now, the principles themselves, for example, principle one is we acknowledge that as our services often involve the application of specialists and technical financial knowledge, this places many clients in a position of dependency and as such imposes upon us, a greater moral duty to act in the best interest and as a safe pair of hands, especially to those who find themselves in vulnerable circumstances. Now it’s an obvious statement. Many firms already would say, well, we abide by that. So the principal, all the remaining principles in the charter are there to help firms become more focused on probably what they already unconsciously do. And we found that firms that are, are a bit more advanced actually adopt the charter because it’s very aligned to what they’ve already done as, as a process or a commitment. So the rest of the, the rather than go through all of them anyone can find them on our website, the Financial Vulnerability Task Force website there’s a tab, the charter and of course this is what we expect people to commit to.

Keith (17:57):
So it’s, it also, we’ve had feedback that it’s really helpful because it has really helped to stimulate some thought process of what the firm or the individuals already do, but hadn’t consciously written it down in anywhere. So many firms have adopted the charter. They’ve actually printed it up, put it in a frame and they’ve actually put it on their office wall, on their website as their adopted charter nine underlying principles about how they deal and treat their customers fairly. So again, we are slightly changing terminology. The charter is, it just allows firms and individuals to adopt something that allows the firm to talk about what they do, not, what we do, it’s what they do. So again, the, the independence and impartiality is the taskforce is a community interest company. All of the directors on the board who are very varied and bring different experience in are, are all pro bono.

Keith (18:55):
So there’s no commercial interest. We have no intent on creating training or, or so that we can commercialise or monetise anything that we do. So everything we’re going to do going forward will be working in partnership with other professional organisations, signposting people to appropriate training, et cetera. So ours isn’t about creating a commercial opportunity. Ours is genuinely trying to galvanised sector around a set of standards and indeed a charter that consumers through the badging that, that people can use the logo that and I’ve seen it already at a number of events that I’ve been at, where people have proudly had our logo on their slide deck as their commitment to raising professional standards. The whole principle is if we don’t get things like that as a kite mark, or a standard that we can all sit behind into the public space, then who knows.

Keith (19:50):
So we’re all just, you know, five and a half thousand firms doing our own thing. And it all gets very confusing. So we are trying to create something that is easy for firms is, becomes visible to consumers because building public trust is often around dealing with a vulnerability about, I don’t know what to ask an advisor. Well, very often if you create something that tells you what good practice should look like and how firms should be operating it makes it easier for the consumer to start to build confidence in trust because we all feel about a bit stupid asking what we think might be a stupid question, when in fact there’s no such thing as a stupid question, there’s often just stupid answers.

Kathryn (20:35):
Yeah, no, you you’re completely right with that. I was going to say as well, we, on our website, we do have the, the taskforce logo, very proud on our website as well. And it’s definitely something that we promote. I know from we talk about the website and everything, the website, you do have some resources that are available for people, to like help them understand things like scams and things like abuse, coercion, decision making and safeguarding. I know we’ve kind of obviously we’ve already said that in a sense, everybody has some level of vulnerability either now or in the future, but in terms of the things like the scams and the abuse and everything do, do we know kind of what the scale is of these issues? You know, how many people are, are quite vulnerable to this? Because I think we kind of think of, you know, I still try think, go back, think of my grandparents, who would suddenly trust anyone and anything that suddenly said something to them. But I, I imagine it’s not just, you know, it’s not just grandparents, is it, it’s so easy now to suddenly be faced with a scam. And, and I imagine that probably the majority of us are actually potentially vulnerable to that.

Keith (21:36):
Yeah. I, I mean, actually listeners might be absolutely shocked to learn that last year, the UK, this is both firms and individuals lost 137 billion to financial fraud.

Kathryn (21:50):
Oh, wow.

Keith (21:51):
It’s 137 billion to, to financial fraud last year. So, it’s become a massive issue. Not, not least ironically that where we now use the internet as a means to increase access. Of course, what it’s also done is it’s allowed scammers and crooks to also increase their access to consumers and relieve them of their hard-earned savings or, or assets. So again, we try to create a safe pair of hands working with the regulator and the government, to find ways in which we can address and stop scams from happening. We’ve created with third party specialist content, some references to friends against scams, for example FCAs scam awareness initiative and, and guidance on what consumers can do or a reference point on which companies have already been identified. But there’s so much more we can all do to, to address the issue that is going to carry on.

Keith (22:53):
Now, the sad thing is with scams, we often find as well that the scammers are usually really easy to deal with. In fact, they they’re often their websites are extremely professional. They often have links to regulatory sites. They often warn you about not being scammed out of your money. So, they’ve become really sophisticated and clever. And interestingly enough, there’s been an increasing number of wealthier people, well-educated wealthier people who have increasingly fallen victim to scammers over the last two or three years. So, it’s a massive issue a massive issue for us because, you know, in the past it was probably people that wouldn’t necessarily have fallen into a typical advised client category who were at risk of, of scams today is exactly the stereotypical financial advisor client bank who are, have increasingly become victims of financial fraud and scams in the UK. So massive issue that we all need to really focus on.

Kathryn (24:02):
Yeah. Oh, absolutely. I know. Some of the things that I do sometimes I do quite a lot of work with charities and, and partly what I do is try and, and obviously not saying it’s, it’s going to protect absolutely anyone and everyone or that it answers everything. But, you know, I try and give them tips, you know, along the lines, you know, and to their members to sort of say, right, ask them for like their, their regulatory references, you know, don’t do anything on the call, go away, research them, like you say, you know, try and research the website if at all possible. But as you say, they, they, even, the websites can sometimes be, you know, a bit a bit too good in a sense to, to spot sometimes. But, you know, there are steps, which it certainly is something that we, we definitely need to work on.

Kathryn (24:40):
I know for me, sort of like in the past I’ve found that there’s quite a few financial professionals that are really on top of spotting vulnerabilities. As I say, from our regulatory background, you know, we’ve always had, in a case of like the age of somebody would typically be something that would stand out and we are seeing more and more that it could be other things. So, you know, vulnerability could be that there’s someone that you love has passed away. So that’s obviously vulnerability you know, recognising other areas like potentially as well sudden wealth, so again, if somebody has passed away, have they had an insurance policy or investments, pensions that are suddenly passing to someone else who’s receiving a lot of money, never had any idea what to do with that kind of level of money. The diagnosis of a severe illness, you know, things like economic abuse as well. And as I was saying before, like a lack of protection when it comes to income and not being able to work, I suppose what’s interesting to maybe hear from your point of views, you know, what are the key steps that advisors can take? Cause there’s, as we said, almost pretty much everybody has a vulnerability either now or in the future and what can advisors do and how can they potentially change their approaches or what steps should they take to be able to really try and identify where those vulnerabilities can be?

Keith (25:58):
Yeah. Well, all of this is actually really timely because this is exactly where the, the FCA are going with consumer duty. It it’s, I think the simple answer is it’s about increased conscious awareness rather than actually carrying on in an unconscious belief that we we’ve always done the right thing because no one ever complains about us or in our 20 years of advising, you know, you only had one upheld complaint. That isn’t really what regulation and good outcomes is about. It’s being conscious about the good things that we do. So, the reason that we’re often asked to test what we do to prove that our clients are happy with the service is because the absence of a complaint doesn’t mean to say that people are getting good outcomes or they’re happy with what you do. So, it’s incumbent upon all of us to be a bit more, you know, a lot more conscious and awareness of the responsibilities that we have and the duty of care that we have towards our clients.

Keith (27:01):
What is really important though, it’s easy to say those things. It’s a really broad statement that we’ve just got to all be more conscious. The reason that we’ve created a library now of guides is because we all, sometimes it’s easier. It’s sometimes easier to have a checklist on the kind of things that we should be doing, because then it allows each firm and each individual to start to build on that, just to use it as a foundation of something, to point them in direction, start thinking a bit more consciously. So, stimulating our thoughts. We think about the fact that, you know, when we typically go to a conference, sometimes the content is really good. It all makes sense. I enjoyed the session, but actually it’s the power of talking to a peer in the coffee break that brings it all alive. Because often we are talking about real cases, which actually give examples of certain circumstances.

Keith (27:52):
We’ve got to be a lot more conscious to do that. And I think Kathryn, we, we you mentioned things like sudden wealth, we’ve launched a paper on sudden wealth. We are providing a guide. And in fact, one of our directors was for eight years, the exclusive appointed advisor for NS&I’s lottery winners. And during that time-built mass of experience on just how vulnerable people can be in such a positive scenario of winning a million pounds. Not least of course the experience he came across of young people winning a million pounds and just how vulnerable they became to family members, abusing their relationship and trying to relieve them of, of their winnings. So financial advisors are increasingly seeing, we also launched the paper with the all-party parliamentary group last year Professor Keith Brown, who sits on our board kindly contributed significantly to a paper on theft and fraud within families.

Keith (28:58):
Now, this is really interesting cause when it was launched, lots of advisors started to tell me that they’re noticing more and more concern around why people are disinvesting at certain stages without any logical reason. And they suspect that there could be pressure from family members. Now, in some instances, you know, an elderly parent might simply want to help you know, an adult child who’s got debt to clear it down while they can, but nonetheless, the advisor needs to be very alert to whether or not financial abuse is occurring. What was commonly asked of me is, absolutely I’m spotting it, but what do I do about it? And they’re the kind of things that Kathryn, we’re trying to now work through with working parties, practitioners who are prepared to give up some of their time to share good practice that creates again a safe pair of hands, but an environment for adopters of the charter to come to and pull on resource for firms who you know, I’ve come across a number of firms who already do a huge amount of work who are now prepared to share some of their work with the broader community.

Keith (30:09):
It doesn’t, it doesn’t erode competitive, quite the opposite. Actually it starts to unify standards. And this really is all about building trust, because there’s over 8 million or more consumers in the UK that don’t really engage with financial advice who need it, but just don’t do it. The sad thing is they become even more vulnerable to scammers. So, there’s something that we’ve got to do. And that’s why I said earlier, if we just get these things right it will lead to an in increased demand for the kind of services that our doctors and, and firms like yourself and your clients do. So if you go onto our library, anyone who wants to go on there, there is sudden wealth we’ve just launched. Although it hasn’t hit the press yet, but we’ve got an excellent guide on lasting powers of attorney.

Keith (31:01):
And that’s a really, really important area for the financial advice sector we’ve had some expert opinion in, from a legal expert, Caroline Bielanska, who again, sits on our board to give us that breadth of experience and knowledge. There’s another working party led by Tony Miles, who’s a director of Care Box and the director of the task force who’s creating who are creating a, a guide on divorce because that’s clearly another huge area that, that creates a vulnerable circumstance that needs addressing. And of course, financial advice and insurance can play a key role in addressing those vulnerable circumstances. So it’s, you know, our purpose name is how do we help more and more professionals across the sector have a go to place that they can take out the information, not exclusively. We, you know, we don’t expect it to be the place that everyone goes to, but actually where would you go if you want to know the basis of good practice around theft and fraud within families or sudden wealth and what the potential issues are that I need to think about.

Keith (32:12):
So I think for all of us sharing, good practice is a, is an obvious thing that many, you know, I’ve heard people across the profession talk about for years, it’s great to, to share experiences because we learn something every time we talk to each other. So it’s the same thing. The more conscious we are yeah. Of the fact that government and regulators are concerned about that, the increasing level of vulnerability of the public. And that’s why we are seeing things like consumer duty, which really tries to pull everything together, whether it’s TCF vulnerability, et cetera. And I think we are already there. I think the frustration that I often find for a lot of people is they’re not sure whether they’re doing the right thing or not. But obviously they, you know in some of my conversations with regulators, not just in the UK, but in other countries, you know, I often used to challenge them on what their primary purpose was.

Keith (33:08):
And often it, it, it made them stop and think, and I said, well look, you know, as leading the, the, the sector’s largest professional body for financial advice in the UK, mine is really simple, right? We’ve adopted a royal charter, which is about raising public confidence and trust in our members, now to do that, we’ve got to provide them with technical knowledge, you know, improve competence through technical understanding, but also CPD guidance. And importantly, we’ve got to socialise with each other around cultural behavior. So, if we use the wrong language, it doesn’t mean to say we haven’t intended to do the wrong thing, but actually the perception is we’re just in this for ourselves, not really for our clients. So, I was creating that framework. And to a regulator, you say, so what is your purpose? So, ours is to try to improve public confidence and trust in our members in the wider profession, what’s yours?

Keith (34:00):
And it was interesting because the purpose of good regulation is to improve public confidence and trust in the sectors that they’re regulating. But often regulators unconsciously, try to demonstrate that you can be confident because they’re there taking action. So, the, but the only thing the public see is the regulators taking action against the minority who do the wrong thing. It actually absolute distorts the perception, erodes trust in the sector and is likely to deter members of the public making the right decision to seek out either the appropriate protection that they need or the level of advice that they should be getting. So, we, we were working carefully with regulators, say not just here, but internationally in fact, have a, an invite from one to speak abroad on, on vulnerability. But it’s how we now translate that into everyday language. So, I think the important thing for me, for financial advisors, they are much further ahead than they realise.

Keith (35:02):
But often they’re massively frustrated because they think regulation is making life over bureaucratic, extremely costly. And whilst that is true, because regulation often does work to the lowest common denominators. So, by definition, if it’s the lowest, you’ve got to accept that not everyone’s guilty of the issues you’re trying to address, but you are forcing everyone to have to address them. But I think it’s because sometimes we haven’t shown that we go to the regulator and say, tell us what it is that you are worried about. And let us work out with, the profession, what it is we can do to address it. Now, what we could then start to see is less regulatory reform to force behaviors. Because often trying to force behaviors can drive the wrong outcomes. It makes and increases the risk of vulnerability in the community. So, there are interesting conversations that we are having with both HM Treasury and the FCA where we’re trying to help their thinking.

Keith (36:02):
But what they’re doing could have unintentional consequences of actually increasing vulnerable circumstances rather than reducing or addressing them. Now, you know, for some advisors, you know, they might see that as we’re having a go at the regulator. And I guess to some extent we probably are, but we’re just trying to make them conscious that with every good intent to deliver good consumer outcomes, there’s a very big risk that regulators themselves, are increasing vulnerability through the fact that there are eroding confidence and trust. So, there are interesting dynamics at the moment for me with the years of experience is trying to bring into the fore how we all often see life. And it’s not often in the, you know, it’s a bit like consumers, you know, it always makes me smile when you say to a consumer, wants your capacity for loss? Like I don’t want to lose anything, I’ve come to you to make money.

Keith (36:56):
But of course, we’ve got to ask them, we’ve got to point out, you know, when we go through their, their, their attitudes to risk and how the markets work. But of course, it’s a counterintuitive question. What’s your capacity for loss? We also use terminology that, that isn’t really consumer-centric. And in, in the same way we increase vulnerable vulnerability rather than actually reduce it because we, we make things technical. So, you heard me earlier say that you, the very first principle of the charter was recognising that we often can use technical jargon. Sometimes we can’t avoid it. You know, we just have to, to comply with the rules, whether we like it or not. So, but in using that technical jargon, as many advisors know from the firsthand experience, the clients really sort of glaze over and they’re not, they’re not particularly interested, but we are duty bound to go through it. And, and what the charter is about is recognising how we deal with that specific vulnerability, that it’s a requirement that a client should know. But actually, it’s a technicality that, that bamboozles them.

Kathryn (38:03):
Yeah. I was going to say from listening as well to like all your background and everything, you know, it’s very clear that there is so many so many areas of experience that you have. There are so many interconnections of different areas that you’ve been, to try, obviously to get where you are and to build what you are doing. And I think something that we’ve obviously been hearing a lot about in the, the industry the last couple of years as well, is this concept of sign posting. And, you know, I, to me that probably is again, probably one of those things where we’re saying like a firm possibly already has strategies in place to help support them with vulnerability. And that they’ve maybe not specifically written it down or recognise that. I mean, for myself, I kind of see sign posting as a process that helps in terms of ensuring that the vulnerability of a client is addressed.

Kathryn (38:46):
As an example, so I, I purely work in protection insurance. So obviously I don’t do investments or pensions or anything. And we have lots and lots of people who introduce to us who are in the mortgage space, who are other protection advisors, you know, again, pensions, investments, but they don’t do for quite a few of them. They don’t do protection. So, they’ve established and gone. I don’t do this. I like, I don’t have the resources to do this, or I don’t have the capacity. Or it’s just not my thing. And so, they’ve said, right, but that’s not, that’s not doing everything that I can do for this client. And what I need to do is find a firm, ourselves or potentially others who can actually step in and go, right, you’ve done a brilliant job there. I’m going to step in and make sure that this vulnerability is addressed.

Kathryn (39:30):
And I think maybe sometimes that can sometimes be important and, and powerful for people to realise that, you know, when we’re talking about vulnerabilities, you know, we are talking about change of mindsets. And, but I, I, you know, I think people need to make sure they don’t think of it as like, right. I’m going to get like this thing of like 50 things I need to do, to suddenly make sure that we’re completely on top of, you know, people who are vulnerable and this and that, and I’m going to need to suddenly start doing this. It can be as to answer some of the things, some of the, the concerns could just be as simple as saying, right. You know what? We are not addressing that vulnerability internally, because it’s just not our key skillset, but that doesn’t mean we can ignore it. We need to find someone else to do it. And I’m assuming that sign posting is, is going to be quite a, a powerful tool in this.

Keith (40:15):
Yeah, it, it absolutely. I mean, actually the you know, in my career in particularly running a big IFA business, I had to think of it the other way around about rather than introducing another task for someone, is actually how we could use referrals or sign posting for a service that we don’t provide as a business opportunity because it did often increase the interest on, you know, if you could do something that just in your normal course of action, if you referred someone to a service that you didn’t provide yourself, that you could benefit. It, it often fractured interest. Now most advisors actually then started to feel that it was a bright thing to do. So, they then realised that yes, the remuneration, the additional business opportunity was great, but at the same time, actually it did make me feel good because I was forgetting that I have a duty to spot needs whether I can fulfill them or not through the service I provide, but certainly then to have relationships with others who might be able to fulfill that gap that I can’t fill.

Keith (41:23):
So, I think that’s a really, really important role that we all have to play. We do need specialists in our, our market, you know, as you gathering focus on protection, it is such an important, you know, in my life when I started under the hierarchy of needs, it was the number one. Well, of course, as investments became more relevant, of course, first of all, we had to make sure the client had an emergency fund in place. Yeah. So, you know, even that language has gone now, you know, so the fact that we went into COVID with huge amounts of low resilience and people with no real emergency funds behind them, because there’s no conscious awareness of the importance of having an emergency fund or even categorising it as something and why you need it protection and understanding why protecting is, is one of the most important aspects of financial planning, I guess the flip side for many IFAs that I’ve spoken to, of course they don’t believe that there’s often a huge need, other than maybe inheritance tax planning.

Keith (42:23):
For protection within their stereotypical client bank. But what we are seeing is more and more advisors are realising that what service do you provide to the family? So, when we talk about intergenerational wealth transfer. How vulnerable is your clients, your valued clients, family, and what do you do about it? You are an expert, on hand and what do you do? So, it’s really pleasing to hear more and more firms are now starting to think probably from the threat of the potential intergenerational wealth drain. That may not stay with their firm. Actually. I’m now starting to think actually, how do I offer a free consultation once a year to adult members of my client’s family where protection might be one of the key elements of the initial advice. So, I do think we have a duty to do that, on the flip side, of course, not just advice services.

Keith (43:20):
And I, you know, we are doing lots of signposts in, again, on our website where more and more adopters are saying, if I spot this, what do I do about it? Um in some instances it’s awkward for an advisor to do everything about it. So, for example, if you are spotting financial abuse within a family, you need to address it, but you may not be the expert that can give the guidance, but you do need to split it. And then actually it’s having somewhere, you can signpost the client too to suggest that they might want to, to go to this source who may be able to give them some, you know, some specific guidance on any concerns or issues they have. So I think what we’re also trying to do is build up that confidence that we can’t necessarily be the expert for everything, but where we spot things firsthand, what do we do about it?

Keith (44:11):
Because we are not the expert. Do we just walk away? It’s a bit like, you know, spotting a scam. Do we, do we just go, that’s obviously a scam and do nothing about it, or do we consciously say actually I’m going to report back to the FCAvia their scam website. And, again, it’s that consciousness about, well, I can’t really do anything about it. Well, actually you can. But, but I think in fairness, what we’ve recognised is that’s easy to say. But actually, when people are really super busy, when they’ve already got enough on their play, we, I think they feel duty bound that we’ve got to do more to help the profession, to make their life a bit easier by providing them with an effective resource pool guidance or, or sign posting which makes life a bit, bit easier for them because sometimes that’s all we need to do. We don’t have to give someone advice on things that we’re not the expert on, but actually it’s pretty good when you, you feel good about, I don’t do protection, but I know an expert who does, for example.

Kathryn (45:13):
Exactly. And also vice versa. You know, I do protection, but I, I don’t do the others, but I know an expert in private medical insurance and, you know, investments and pensions. It is something that, you know, becomes mutually, this often a very big mutual network that suddenly starts developing. And as you say, you know, there can sometimes be, some commercial opportunities there as well. I think, did you say as well that on the website, there’s potentially some case studies, are you, do you have some sort of clear examples, of where, where advisors have really stepped in and being able to, to really help people?

Keith (45:47):
Yeah. I think there’s lots of great examples about where advice steps in, but we’re just building that on our library at the, at the moment. So, case studies are, are often a really good it’s a bit like culture, Kathryn, you know, when I was leading Personal Finance Society and, and of course, one of the underlying principles was that there, that you had to subscribe to the code of professional ethics. And of course, everyone would say yes, but you know, who can cite what’s in the code of professional ethics, because when we thought about it, of course, people will subscribe to a code of ethics because, they’re ethical. Um and you can’t be more ethical, you’re either ethical or you’re not ethical. Um you know, it’s a bit like you, can’t be more honest, you’re either honest or you’re not honest.

Keith (46:35):
So, we had to then start turning ethical dilemmas into case studies, which then helped to bring ethical, you know, a code of ethics to, to life. It became, it made it real. So, in a very similar way with vulnerability, you know, we already spoke earlier that you know, a lot of advisors in the past wouldn’t have recognised that doing the right thing at the point of advice and checking suitability and affordability made it suitable. But actually it was not asking the question about, are you planning any major change in the next two or three years that could affect your ability to fund you know, your investment plan or pay your insurance premiums? Because had they’d bothered finding out they could have avoided the client having to lapse the contract two years later when a major life change that had been planned happens and the client financially loses.

Keith (47:33):
So, you know, we wouldn’t necessarily think that’s a vulnerability the, the regulator expects us to deal with, but I can tell you in the, in the nineties, things like sustainability was one of the key issues the regulator had rather than affordability. They could see that, you know, a lot of people might have been able to afford the 10-year term at the point of which it was sold to them, but it was evident that the life change event had been planned at that time. And if the advisor had taken the trouble to, just to, to question it, the client wouldn’t have lost a load of money through lapsing. Now the same in your particular field of expertise is protection was one of those big areas where, you know, lapse rates persistency started to become a major focus as you, you would know.

Keith (48:21):
And when I was a director of, of a big life company, you know, persistency rates was obviously one of the major KPIs. So, yeah, so it’s interesting, but you know, we don’t always see, we, we, we don’t use in the similar way that consumers struggle sometimes with our terminology, I think regulators, we got to try to find a way as a task force to work with regulators and policy makers to make their intentions become relevant language for the sector. Rather than, you know, often there can be a disconnect. The regulator and the sector actually are a lot more closely aligned than I think many financial advisors would realise. In fact, I’ve had many that have doubted me when I’ve said, listen, they know exactly what’s going on, but they can’t always share. So, you think they don’t know, well, they look at lots of firms like yours, lots of advisors like you, so they know exactly what’s going on, but they’re not particularly good at sharing it because the, the regulator themselves feel vulnerable that if they share what they believe is good practice, you’ll adopt it, but it may not be appropriate for your business or your clients.

Keith (49:34):
So, so they often can come across a bit unhelpful or aloof. But we, as a task force can, should be able to translate some of those expectations into tangible case studies, examples, or terminology that becomes relevant. So, you know, your question about case studies, we are going to use them a lot more to try to turn things like vulnerable dilemmas or circumstances into reality and, and just reiterate every single client that comes to an advisor has a vulnerable circumstance. If the only one they’ve got at that particular point in time is temporarily. They’re dealing with someone who knows far more about the subject matter than they do, and therefore have no option, but to rely on them. So that’s a huge responsibility and privilege that we have often. When people have no option, but to just trust what we tell them, but that is a huge vulnerability at the same time. So, I think if we, if we just respect those we start to see that these rules aren’t really about rules, they’re what we normally do. We, we would expect to treat our customers fairly. If there was no regulation, a lot of firms would still do what they do. They would still have checklists. They would still have conscious awareness sessions about, are we really doing the right thing? How do we test that? Just because no one’s rung us up and complained. Does that really mean we are still delivering a great service and everyone’s happy?

Kathryn (51:05):
Yeah, no, absolutely. So in terms of the Financial Vulnerability Task Force, so you have a website, is that the best way for people to get in touch and to be signing up and checking that they kind of are doing what the charter is hoping that they do?

Keith (51:18):
Yeah, absolutely. And we, we are just at the next phase of, of development. So, there’s going to be quite a lot of changes to the website soon, but the, the important thing is that it does give so there’s also very useful resources on there at the moment. There’s lots of signposts to different organisations that could be useful for advisors. But the key part of, of what we wanted to achieve is to give individuals and firms a place where they could actually stimulate their own thought process around what they do. So again, I, I just reiterate sharing resource, good practice and ideas. Isn’t about what we do. It’s really about what you do. You know, coaching people over my career was more about stimulating what they already thought, the ideals they already had, the beliefs they already had. And that actually, it was often getting the best out of them rather than them adopting, you know, my, my views or, or my strategies.

Keith (52:22):
And I think in a very similar way, that’s what we’re trying to do here, but actually, how do you do it without visibility? So, you will see for those that adopt the, the charter, interestingly enough, we’re getting more firms who adopt the charters and now want people within their firm to adopt the charter, because it becomes a visible and conscious awareness that they’re committing to something. Um and equally it means that they get, you know, nice, colorful logo that they can actually put on their business cards, on their stationary or on their website without detracting from the firm’s own marketing brands. Cetera. So, for example, it’s not the taskforce logo that’s used, it’s the safe pair of hands, the, the charter, the financial vulnerability charter that firms can adopt and use.

Kathryn (53:09):
That’s brilliant. Well, thank you so much for, for joining me, Keith, and for going through all of this’s been really, really insightful, and I’m really hoping that lots of people go in to check out the website. I believe the website is www.fvtaskforce.com. So just for anybody with my northern accent that couldn’t pick that up, that is Foxtrot Victor taskforce.com. And next time I’m going to be back with Matt Rann and we’re going to be looking at insurance options for people that are working in the armed forces. And if you’d like a reminder of the next episode, please do just drop me a message on social media or visit the website, practical-protection.co.uk. And please don’t forget that if you’ve listened to this as part of your work, you can claim a CPD certificate on the website too. Thanks to our sponsors, the Octo Members. So thank you so much, Keith.

Keith (53:56):
You’re very welcome, Kathryn. It’s been a pleasure.