The European Commission has published a study on consumer vulnerability together with a factsheet.  The study focuses on financial services, energy and online telecommunications and looks at vulnerability in the widest sense. 

The study provides a new definition of consumer vulnerability, a methodology for measuring it and fresh insights into the actual patterns of consumer vulnerability in the three key markets.  Among these markets, the incidence of vulnerability is markedly higher in the energy and finance sectors than in the online sector.

One of the key results of the study is a new, evidence-based definition of consumer vulnerability that distinguishes five dimensions of consumer vulnerability.  A vulnerable consumer could be defined as:

“A consumer, who, as a result of socio-demographic characteristics, behavioral characteristics, personal situation, or market environment:                                                                                 

  • Is at higher risk of experiencing negative outcomes in the market.
  • Has limited ability to maximise his/her well-being.
  • Has difficulty in obtaining or assimilating information.
  • Is less able to buy, choose or access suitable products.
  • Is more susceptible to certain marketing practices.”

This definition takes into account that consumer vulnerability is situational, meaning that a consumer can be vulnerable in one situation but not in others, and that some consumers may be more vulnerable than others.

A major finding is that incidence of vulnerability is the highest when consumers face complex advertising or when consumers do not compare deals at all or have problems comparing deals because of market-related factors or personal factors.  The study finds that specific vulnerability drivers relevant to the financial sector are often linked to complexity of financial products.  Such complexities present a challenge to a very wide range of consumers.

The study found that consumer vulnerability is well-integrated into the UK policy framework, including via the Consumer Rights Act 2015 and dedicated FCA resources.  It is not yet clear whether or how the findings on consumer vulnerability in the financial sector will inform policy but the factsheet makes clear that the study is particularly relevant for consumer policy, such as the Unfair Commercial Practices Directive.  This is because it brings new evidence to refine the understanding of the key concepts of “average consumer” and “vulnerable consumer”.