The Association of British Insurers (ABI) is urging firms to create a “vulnerability policy” by January for clients who may be at risk of poor financial outcomes due to age or other factors such as low literacy skills.

The trade body this week published guidance to help firms, “better identify, understand and support” vulnerable customers. The ABI says that the introduction of the pension freedoms in 2015 created new challenges for customers who may be more vulnerable, such as older people, and those with lower literacy skills.

The guidance has been developed by an ABI Working Party of life and pension providers and draws on examples of good practice to raise awareness of how to best identify and support vulnerable customers.

The guide recommends that firms implement a vulnerability policy, if they do not already have one, by January; provide regular staff training on vulnerability awareness, and continue to share good practice through the ABI.

The guidance focuses on:

Identifying potentially vulnerable customers
This could include the elderly, people with mental ill-health issues, those with physical conditions or disabilities, and customers with lower literacy and numeracy skills. It could also include those who have faced a significant life event, such as a job loss, divorce or family bereavement.

Supporting vulnerable customers
This includes having a vulnerability policy to ensure that all frontline staff are trained in identifying and supporting possible vulnerable customers, and are able to refer such customers to other organisations with a particular expertise.

To help spread good practice the guide’s examples include:

-One agency that uses a traffic light warning system, with red being those customers who are most vulnerable.
-An insurer has implemented training from The Alzheimer’s Society.
-A retirement provider who has a ‘phone a friend’ option allowing a customer to nominate a family member or relative to speak on their behalf should they need additional support.
-A long term savings provider that works with Age UK and the Samaritans to provide staff training.

Rob Yuille, assistant director, head of retirement policy at the ABI, said: “Retirement decisions are complex for everyone, but some people in vulnerable circumstances will need additional help.

“This initiative highlights that providers really want to deliver the best possible service to all customers, and take their responsibilities towards vulnerable customers extremely seriously. While there is already much good practice in the industry on identifying and supporting vulnerable customers, this guide will help all firms better identify those customers who need more support to help them make the right financial decisions.”

Emma Bould, programme partnerships project manager at Alzheimer’s Society, said: “People who are living with dementia and their loved ones tell us a big challenge they face is dealing with insurance companies.

“The issues they have raised include understanding whether a policy is still valid after diagnosis, discussing dementia with people in the insurance sector who do not understand the condition and its progression, and the wording of policies being confusing or not applicable to people affected by dementia.”