Why re-naming vulnerability in protection could change everything

For years now, vulnerability has sat at the top of the regulatory agenda for financial services and protection. Most firms have responded with policies and strengthened governance. Yet despite this activity, there remains a sense across our industry that we’re not helping all the customers that we could or should.

That was one of the central themes discussed at Guardian’s Inner Circle event in April, which brought together advisers, insurers, reinsurers, journalists, and industry specialists to examine how the market supports customers with vulnerable characteristics under the FCA definition.

The FCA’s Financial Lives survey shows that almost half of UK adults display one or more characteristics of vulnerability. In commercial terms, that means this is no longer a marginal issue. It affects a substantial proportion of customers moving through advice, underwriting and claims processes every day.

For providers, the consequences can be hidden. Customers with vulnerabilities might drop out of a process they find difficult to understand, or inaccessible. If vulnerabilities are not identified there is a risk customers end up with solutions that don’t meet their needs. Vulnerable customers might simply feel that the industry does not offer solutions accessible to them. This maintains the ‘protection gap’.

One of the more interesting discussions at Inner Circle centred around the language the industry uses to describe vulnerabilities.

The FCA has suggested firms think carefully before using the word “vulnerable”, suggesting that “firms do not use this label in their interactions with customers”.  It’s easy to see why. The term can feel negative and stigmatising. The alternative discussed at the event was “personalisation”. Is this the perfect term? Maybe not, but it feels like a step in the right direction.

A shift in language can change the nature of an entire interaction. Instead of being asked to identify themselves as vulnerable (most won’t), customers are increasingly being invited to explain how firms they interact with can tailor their service to better meet their individual needs. That feels like a premium service, and considerably closer to where we need to be.

Many protection journeys take place during periods of stress or significant life change. Customers are not always approaching decisions from a position of emotional resilience.

Advisers at the coal face understand this instinctively because they see it every day. One customer may need additional reassurance before proceeding. Another may require more time to absorb information. Someone dealing with bereavement or mental health challenges may engage better through a different communication style.

These are not edge cases. They are everyday customer realities.

For providers and reinsurers, this has implications beyond customer experience. Firms that become better at understanding their customers’ circumstances and engagement patterns are also likely to improve service and create stronger long-term relationships with adviser firms, leading to more people getting the most suitable protection cover for their needs.

One issue raised repeatedly during our event was the absence of a common taxonomy around vulnerability and support needs. Firms currently categorise and record information differently. Advisers capture one set of details, and in the unlikely event that they’re shared, providers interpret them another way. This means customers often find themselves repeating sensitive information over and over again.

Other parts of financial services operate with standardised terminology and shared frameworks. Underwriting language is broadly aligned across the market. Medical definitions are understood consistently. Operational data standards already exist in many areas. There is an opportunity for the industry to move towards more consistent approaches to recording and interpreting support needs. Any future evolution in this area would need to be underpinned by clear governance, data protection safeguards and regulatory alignment.

For advisers, it would reduce uncertainty around what to disclose and how. For providers, it would smooth operational handling and reduce the margin for error. For reinsurers, better data would improve insights into customer behaviour and outcomes.

Most importantly, customers would spend less time navigating fragmented processes during periods when clarity and reassurance matter most.

There was also broad agreement during the event that the industry sometimes overcomplicates its own progress. Large structural challenges generate endless debate as firms search for ‘perfect’ solutions to tackle every possible scenario before implementing anything at all.

A practical starting point, starting small, would deliver greater benefits sooner. A core shared terminology. Clearer, basic information-sharing standards. Focus first on advised channels. Those changes alone would remove considerable friction from the system.

That was the value of bringing the industry together through Inner Circle. Not to discuss vulnerability as an abstract regulatory requirement, but to examine how we can create customer experiences that feel more coherent and more responsive to what people need. Regulation may have started this conversation, but it’s joined up thinking across the industry that will make it powerful and valuable for customers, advisers and providers.

We can turn these solvable problems into opportunities if the market chooses to address them collectively rather than individually.

Carlton’s article was published in COVER Magazine on 26 May 2026.