The Chartered Insurance Institute has said firms can use stronger vulnerability management to expand their client base, improve efficiency and build longer-term trust, rather than treating it simply as an added compliance cost.
Its latest Road to Consumer Trust report, based on a roundtable involving regulatory specialists, financial planning leaders, compliance experts and vulnerability practitioners, sets out what it describes as a proportionate and practical approach to vulnerability management and outcomes monitoring.
The report, titled Consumer Duty, Proportionality and Vulnerability Management for Financial Planning Firms, argues that effective processes can help firms reduce the cost of handling vulnerability on an ad hoc basis, demonstrate value to both clients and regulators, and support better consumer outcomes.
With demonstration of how firms are delivering good customer outcomes identified as a key supervisory priority for the Financial Conduct Authority in 2026, the report says firms should judge the right level of Consumer Duty implementation and vulnerability management against four main factors.
These are the size of the firm, its role in the distribution chain, the characteristics of its client base and the level of risk attached to the product or service being provided.
The CII said firms should measure the same outcomes for vulnerable and non-vulnerable clients, while also tracking the additional support needed to achieve those outcomes. It added that evidence of good outcomes throughout the customer journey, rather than only at the end point, would be important, alongside stronger vulnerability data infrastructure.
The report also highlighted three warning signs that may suggest firms are not doing enough. These include a one-size-fits-all approach to vulnerability, cultural resistance within the business, and outcomes monitoring systems that are too opaque to show whether different client groups are receiving good outcomes.
Among the recommendations are building stronger data foundations, embedding inclusive design and tackling internal concerns around vulnerability management.
Matthew Hill, CII chief executive, said: “Vulnerability management is often viewed as a regulatory burden or an added cost, while it is in fact an opportunity for firms to strengthen client relationships, demonstrate tangible value, and build lasting trust.
“By adapting a proportionate and practical approach, as outlined in the report, firms can not only meet regulatory expectations but also broaden their reach, improve efficiency, and deliver consistently better outcomes for all customers.”
