FCA FG21/1 vulnerable customers: applying it to PI insurance broking

~4 min read

Reviewed by Matthew Bartlett, Director · Last reviewed 01 July 2026

The FCA published Finalised Guidance FG21/1 — Guidance for firms on the fair treatment of vulnerable customers in February 2021. It applies to all FCA-authorised firms, insurance brokers included, and sits alongside PRIN 2A (the Consumer Duty), ICOBS 2.5 on fair treatment of customers, and section 68 of the Consumer Rights Act 2015 on transparency. This entry looks at how the guidance shapes professional indemnity (PI) broking, where the client is usually a firm but the individual across the desk can still be vulnerable.

The four drivers of vulnerability

FG21/1 identifies four drivers that can, alone or in combination, make a customer more vulnerable to harm:

Health — physical or mental health conditions or illnesses that affect the ability to carry out day-to-day tasks.
Life events — bereavement, divorce, job loss, caring responsibilities, retirement transition.
Resilience — low ability to withstand financial or emotional shocks, including cash-flow strain in a small practice.
Capability — low knowledge of financial or insurance matters, poor literacy or numeracy, or limited digital skills.

The FCA is clear that vulnerability is dynamic. A client who was perfectly capable of navigating a renewal last year may not be this year, and the driver may be invisible on paper.

Identifying and recording vulnerability

FG21/1 expects firms to understand the needs of their target market, train staff to spot vulnerability, respond flexibly, and monitor outcomes. Identification is not diagnosis — brokers are not expected to make clinical judgements — but they are expected to notice signals, ask sensitive questions where appropriate, and record what they learn on file so the whole firm can respond consistently.

Recording is the part firms most often get wrong. A note that a client is going through a difficult period is only useful if it is retrievable at the next touch-point, and if colleagues know to look for it. Apex records vulnerability indicators in the client file with a date and the source of the information, and reviews them at each renewal cycle.

Why professional clients are still in scope

PI is a commercial line, and the counterparty is usually a firm. It is tempting to assume vulnerability rules do not bite. They do. The people running solo and small-partnership practices — the sole-practice solicitor, the retiring architect, the accountant recovering from a stroke — are people first. FG21/1 applies wherever the customer is a natural person acting outside a purely institutional context, and the Consumer Duty extends fair-value and understanding obligations further still. See the profession pillars for solicitors, architects, accountants and IFAs.

Practical adjustments a broker can make

Where a vulnerability is identified, the adjustments are usually straightforward and low-cost:

Extend response times and deadlines for proposal-form completion, and confirm them in writing.
Provide plain-English summaries alongside full policy wordings, and offer to walk the client through them.
Meet at a venue that suits the client — the client's home, a quiet office, or by video call.
Involve a nominated representative — a family member, colleague, or professional adviser — with the client's written consent.
Break the renewal conversation into shorter meetings rather than one long session.
Confirm each key decision in writing so the client can review it in their own time.

Consumer Duty reinforces the obligation

PRIN 2A sets four consumer outcomes: products and services, price and value, consumer understanding, and consumer support. Each outcome is harder to deliver to a vulnerable client without adjustment, which is why the FCA treats FG21/1 and the Consumer Duty as reinforcing rather than parallel regimes. A firm that ignores vulnerability signals is unlikely to be meeting the consumer-understanding or consumer-support outcomes for that client.

SM&CR and accountability

Under the Senior Managers and Certification Regime, compliance oversight sits with the SMF16 holder — at Apex that is Matt Bartlett. The SMF16 is personally accountable for the firm's arrangements to identify vulnerability, train staff, record decisions, and monitor outcomes. That is why vulnerability files are reviewed at compliance level rather than left in individual client folders.

Worked example (illustrative)

The following is an illustrative worked example, not a description of any real client.

A sole-practice solicitor is approaching PI renewal. During a routine call the broker learns the solicitor is caring for a terminally ill spouse. That is a life-event driver under FG21/1 and, layered with the demands of running a practice single-handed, may reduce resilience and capability temporarily as well.

The broker records the vulnerability on the client file with a note of the date and source, and flags the file for compliance oversight. Adjustments follow: proposal-form completion is given extended timescales, with the deadline confirmed in writing; the renewal meeting is held at the solicitor's home rather than the broker's office; a plain-English summary is prepared in addition to the full policy documents; and the solicitor's adult daughter attends the meetings as a nominated support, with the solicitor's written consent recorded on file. Renewal is placed with an insurer that offers extended run-off cover, in view of the likely transition to retirement in the medium term. The file is set to be reviewed again at mid-term.