Over the past 45 years, life expectancy has risen dramatically worldwide, to the point where the number of people over 60 is the fastest growing in the world. While 2/3 of people under the age of 80 are in perfect health, ageing is not without its problems for financial organizations when it leads to vulnerability, for medical or psychosocial reasons. All the more so as, if poorly anticipated, this vulnerability can lead to a breakdown in customer relations. Why define a vulnerability policy? How can it be implemented? How can we identify situations presenting risks of vulnerability? Here are some answers.
WHY AND HOW TO DEFINE A VULNERABILITY POLICY?
Financial organizations provide services to customers who are going through difficult times and/or suffering from age-related pathologies or disorders. Some of these customers may therefore be particularly vulnerable. And yet,
- It is essential that these customers be able to exercise their rights in the same way as anyone else;
- Customers are keen to preserve banking secrecy and privacy;
- You need to protect yourself against possible prosecution for abuse of weakness.
Companies that take their customers’ vulnerability into account not only promote the safety and well-being of vulnerable people, but also have a positive impact on their own reputation. Anticipation is a guarantee of seriousness and fluidity in the business relationship. It is therefore necessary to train staff to listen and understand, give them flexible options and, where appropriate, allow them to refer particular problems to specialists within or outside the company, with the expertise and discretion to deal with difficult situations.
ASSESSING VULNERABILITY: THE BENEFITS OF KYC
The difficulty for a financial organization lies in assessing the situations that can lead to customer vulnerability. Vulnerability is multifactorial. For example, it is perfectly possible to maintain a business relationship with a customer over 80 years of age who is not at all vulnerable.
Conversely, people under 60 may already be showing signs of vulnerability. Only a careful analysis of each individual’s situation can identify potential vulnerability.
- Isolation
- Bereavement (of a very close person or repeated bereavements of people in the extended circle)
- Accident
- Disease
- Loss of autonomy
- Lack of language skills
- Etc.
These different elements are indicators, whether isolated or combined, which should alert us to a possible situation of vulnerability, and which should be taken into account in customer relations. Once again, to protect both the customer and the institution. To identify these indicators, it is imperative to integrate them into the KYC process, which then becomes doubly effective (for the fight against money laundering and the financing of terrorism on the one hand, and for the identification of vulnerable persons on the other).
EXAMPLE OF A PROCEDURE TO BE IMPLEMENTED
- Audit of customer files and identification of people at risk; implementation of an internal procedure for dealing with vulnerability.
- Set up a “progress form” to record all key stages in the relationship, any important dates (setting up a guardianship arrangement, for example), and set deadlines for bringing the relationship back into focus. Regularly document/verify the powers of attorney of legal representatives. Schedule interviews.
- Determine in writing the agreed modes of communication with the customer, who may not have integrated the new means of communication (this also helps to identify a suspicious order). If the customer is in EMS or dependent on a third party, special care must be taken to protect banking secrecy and the customer’s privacy.
- Seek to appoint a suitable proxy: in this case, you need to check his or her age, relationship to the holder, degree of involvement with the holder (a caregiver, assistant, neighbor, etc.) and the influence he or she is likely to exert on him or her.
- Control the scope of powers entrusted to the agent in order to protect the client’s interests.
- Consider its ability to give instructions.
- Suggest that the client set up a Mandate for Incapacity: art. 360 to 369 CC.
- Periodically check that the objectives initially set by the customer are being met.
If it’s too late and contact is lost
- Find out about the customer’s situation and determine the circumstances that are preventing him or her from communicating with the bank. Determine the degree of seriousness.
- Check whether legal steps have been taken to appoint a legal representative to safeguard the person’s interests.
- Check whether the measures applied by law to persons incapable of discernment (art. 374 to 381 CC) are appropriate to the circumstances: Legal right of representation for spouses/registered partners. Spouses and registered partners living with a person incapable of discernment have a legal right of representation in the absence of guardianship or a mandate for incapacity. This right is limited, however, and allows, for example, only “ordinary” management of income and assets. In the event of incapacity for discernment, the competent child and adult protection authority (APEA) appoints a curator ex officio or at the request of a relative of the incapacitated person. The curator’s powers go beyond the legal right of representation, but they do have their limits. Even a curator cannot act “as he sees fit”, and must obtain the approval of the APEA for certain transactions (listed exhaustively by law), such as the purchase or sale of real estate. In addition, the APEA examines the curator’s annual financial report and activity report.
KEY FINDINGS: YOUR ALLY IN VULNERABILITY MANAGEMENT
Of course, how the situation is managed will also depend on the nationality and place of residence of the holder. In such cases, the steps required to ascertain the situation will often involve an investigation in the field, obtaining the appropriate documentation and, where necessary, translations, certified copies and apostilles, which in some countries can be a real headache. We are well versed in these matters, and can provide assistance if required. Please do not hesitate to contact us for further assistance.
