The Chartered Insurance Institute (CII) is positioning customer vulnerability management as a commercial opportunity for financial planning and insurance firms, rather than simply a compliance cost.
According to its latest Road to Consumer Trust report, effective vulnerability management can help firms expand their potential client base, reduce the cost of ad hoc vulnerability handling, evidence value to clients and regulators, and build long-term consumer trust.
The report comes as vulnerability moves further up the supervisory agenda. The Financial Conduct Authority (FCA) has made Consumer Duty implementation and outcomes monitoring a core focus for 2025 to 2026, with particular scrutiny of how firms are designing products and services to meet the needs of customers with characteristics of vulnerability.
The CII report noted that "demonstration of how firms are delivering good customer outcomes" has been identified as a key supervisory priority. Roundtable participants outlined four core principles for determining a proportionate level of Consumer Duty implementation and vulnerability management -- the size of the firm, its role in the distribution chain, the characteristics of its client base, and the risk level of the product or service.
The report concluded that firms should measure the same outcomes for vulnerable and non-vulnerable clients, and then track any additional support provided to achieve those outcomes.
The report also highlighted three indicators that a firm may not be managing vulnerability effectively: a "one-size-fits-all" vulnerability process, cultural resistance within the business, and opaque outcomes‑monitoring systems that cannot show whether different client groups are receiving good outcomes. These weaknesses mirror findings from the FCA’s own review of how firms are treating customers in vulnerable circumstances, which pointed to patchy monitoring and inconsistent integration of vulnerability into product and service design.
Recommendations from the CII roundtable include building strong data foundations, embedding inclusive design in products and customer journeys, and addressing cultural concerns around vulnerability - such as fears about “labelling” clients or mishandling sensitive information. The FCA has separately urged firms to use their understanding of vulnerability in their target market to shape product and service design, setting out examples of good and poor practice.
The CII’s work sits alongside a growing body of regulatory and market activity on vulnerability.
The institute has recently launched a dedicated vulnerability research programme with Chartered firms and Three Hands Insight, drawing on “lived experience” of customers with ill health, disability, dementia, neurodiversity and caring responsibilities to inform future standards and tools. This underlines that vulnerability is becoming a core competency for intermediaries, underwriters and claims teams.
From a market perspective, the report frames vulnerability management as a way to reach underserved segments and improve operational efficiency. Moving from ad hoc handling of vulnerable customers to structured frameworks with clear data, governance and training can reduce case-handling friction and make it easier to evidence value for money and good outcomes, areas that are now covered by Consumer Duty supervision.
The FCA’s recent multi‑firm work under the Duty has shown it is prepared to challenge boards that cannot demonstrate their management information supports good outcomes for all customer groups.
CII CEO Matthew Hill (pictured) said firms that invest in proportionate, practical vulnerability strategies can move beyond narrow compliance.
“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," Hill said. "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."
