The number of people who are potentially ‘financially vulnerable’ has doubled from 1.7m to 3.3m over the past year.
This was the stark picture set out to delegates at the Corporate Adviser Master Trust and GPP Conference by Scottish Widows take to market specialist Robert Cochran, who said that almost a third (28.8 per cent) of the wider Lloyds customer base was potentially in this position.
Cochran said that this was due to new definitions of vulnerability put forward by the FCA but with a cost of living crisis started to have serious effect this figures was likely to rise further.
Scottish Widows, and its parent group Lloyds, compiles regular surveys looking at people’s attitudes towards their finances. While Cochran said there is no evidence to date of people stopping contributions into pension funds he said it is clear there has been a significant rise in the number of people who are worried about their money, whether it is meeting regular bills or savings for the future. “Looking ahead it is a pretty worrying picture but one we will continue to track, in terms of people’s attitudes and what this means it terms of actual spending and saving patterns.”
Cochran points out that the company has put in place steps to flag up potential customer vulnerabilities across all its product lines. For example if a customer has missed regular payments on insurance products or going into an unauthorised overdraft this could be a sign of financial distress. This would be flagged by the pension team if the customer contacts them.
Cochran said there are a number of reasons why an individual might be more financially vulnerable: this includes financial distress, being elderly, having caring responsibilities or speaking English as a second language. When it comes to pensions he said financial distress and speaking English as a second language were the two most widely seen financial vulnerabilities.
It was important he said that potentially vulnerable customers are identified and staff receive proper training to ensure they can support these savers appropriately.