Vulnerable customers: is this an area Guernsey should be considering?

The identification and support of vulnerable customers has become an increasing area of regulatory focus in a number of jurisdictions, particularly in the UK, where specific guidance and regulatory expectations have developed in recent years. 

Guernsey is not required to follow UK regulatory developments, nor should UK requirements automatically be regarded as local best practice. Guernsey’s regulatory and legislative framework should continue to be driven by local requirements, risks and market needs. However, regulatory developments in larger jurisdictions can sometimes highlight emerging themes that may be relevant to consider locally, particularly where they relate to customer protection, fair treatment and appropriate outcomes. 

Whilst Guernsey's existing regulatory framework, including the Principles of Conduct of Finance Business and the relevant Fiduciary and Pension Rules, already establishes high-level expectations regarding the fair treatment of customers and the delivery of appropriate outcomes, it is less clear whether firms within the Guernsey pensions sector have developed consistent approaches, policies, procedures or training to assist in the identification and support of vulnerable members and beneficiaries. 

For pension providers and trustees, vulnerability may arise through a range of circumstances and can be temporary, permanent, visible or hidden. 

Examples may include:

• Members experiencing cognitive decline, dementia or diminished decision-making capacity
• Elderly members requiring additional support when making retirement, transfer, beneficiary nomination or drawdown decisions;
• Members or beneficiaries dealing with bereavement following the death of a spouse, partner or scheme member;
• Members suffering from serious illness which may affect their ability to engage with pension-related decisions;
• Members experiencing financial hardship who may be more susceptible to financial pressure, scams or poor decision-making;
• Members with limited financial literacy who may struggle to understand pension options, scheme communications or investment choices; and
• Members who have become reliant on attorneys, family members or other representatives to manage their financial affairs. 

In practice, indicators of vulnerability may include confusion regarding pension arrangements, difficulty understanding communications, repeated requests for explanations, unusual delays in decision-making, increased reliance on third parties, disclosures of significant health or financial concerns, or signs that a member may be subject to undue influence. 

As pension scheme memberships continue to mature and retirees live longer, this may become an increasingly relevant consideration for pension providers, trustees and administrators. 

Whilst many firms already take practical steps to support members who may be vulnerable, it is less clear whether a consistent industry approach has emerged locally, whether firms have implemented specific policies or procedures, or whether there is a need for additional guidance, training or sharing of best practice. 

We would therefore be interested to hear from industry participants on the following:

• Does your organisation have a Vulnerable Customer or Vulnerable Person Policy?
• Do you formally identify and record indicators of vulnerability?
• Have you established procedures for managing situations involving vulnerable members or beneficiaries?
• Have you provided staff training on recognising and responding to vulnerability?
• Are there any local training providers or resources that you would recommend?
• Have you encountered an increase in vulnerable member or beneficiary cases in recent years?
• Do you believe additional industry guidance, training standards or best practice would be beneficial within Guernsey? 

The purpose of this discussion is not to replicate overseas regulatory frameworks, but rather to understand whether there is a local need for consideration, greater consistency, guidance, training or industry collaboration in this area. 

GAPP members are invited to share their views, experiences and any existing practices within their organisations. Feedback from the wider pensions community would help determine whether vulnerability is becoming a more prominent issue for the Guernsey pensions sector and whether there is interest in developing local guidance, training resources or industry best practice to support firms, members and beneficiaries.