A capable, wealthy client who merely bargains hard is not vulnerable
A worked RES examination question on vulnerable clients, from our Paper 2 bank — with the rule it turns on, and why each of the four options is right or wrong.
The question
A run of very different clients this month — some plainly capable, some clearly not — has a salesperson working out which of them count as "vulnerable clients", for whom the PSM requires greater care, and which do not. Two are elderly and hard of hearing, one has just been through a bruising divorce, and another is a seasoned investor who simply drives a hard bargain, and she wants to know for which of them the PSM's extra-care duty is actually engaged.
Consider the following statements.
- (i) A client with a mental or emotional impairment that affects his decisions.
- (ii) A client who is illiterate.
- (iii) A wealthy client who simply drives a hard bargain.
- (iv) A client in serious financial distress with no means of sustenance.
The answer, and why
Answer: D
The rule. "Vulnerable clients" include those with a physical, mental or emotional impairment affecting their decisions, those unable to make rational decisions, the illiterate, and those in serious financial distress. A capable, wealthy client who merely bargains hard is not vulnerable.
Why D is correct. (i) the impairment, (ii) illiteracy and (iv) serious financial distress all make a client vulnerable. (iii) is false — driving a hard bargain does not.
The other options.
- A drops the financial-distress limb at (iv).
- B drops the impairment limb at (i).
- C adds the false (iii), the hard bargainer.
Exam note. Vulnerability is about capacity or hardship, not attitude. A wealthy hard bargainer is not a vulnerable client.
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