Vulnerable consumers - variations in capacity

Posted on Mon, 22/11/2021

Vulnerability is a broad concept, defined by the Financial Conduct Authority (FCA) as "someone who, due to their personal circumstances, is especially susceptible to harm - particularly when a firm is not acting with appropriate levels of care".

Included within the definition of vulnerability is a lack of capacity. Mental capacity is about whether a person has the ability to understand, remember and consider information and make an informed decision; a lack of capacity is where an individual struggles in some or all of their decision-making.

Full mental capacity means an individual has total independence in relation to health, care, financial decisions and otherwise. Established by the Mental Capacity Act 2005 (MCA) and the Mental Health Act 2007 (MHA) the guiding principles of assessment in relation to mental capacity are as follows:

  1. a person must be assumed to have capacity unless it is established that they lack capacity;
  2. a person is not to be treated as unable to make a decision unless all practical steps to help them to do so have been taken without success;
  3. a person is not to be taken as unable to make a decision merely because they have made an unwise decision;
  4. any act or decision made under MCA for or on behalf of a person must be done, or made, in their best interests; and
  5. before making any decision or acting, consideration must be given as to whether the purpose of the action can be achieved as effectively in a less restrictive way of the person's rights and freedom of action.

The MHA sets out the fundamental principles and considerations that must be taken into account when decisions are being made on an individual's behalf. The principles include respect for an individual's past and present wishes and feelings, minimising restrictions on liberty, and involvement of patients in planning, developing and delivering care and treatment appropriate to them. 

In practice, the legislation restricts the decision-making of individuals who lack capacity. Within the legislation there has been a shift away from attempting to define incapacity towards a presumption of capacity until proven otherwise. 

Capacity is decision specific and may be temporary. For example, you may have the capacity to decide what you would wear that day but lack the capacity of deciding who you should sell your home to, or whether you should consent to a risky surgery.

Fluctuations in capacity are common and capacity is an ongoing assessment for each individual decision. The onus is therefore on professionals to assess decision-specific capacity before authorising medical treatment, financial decisions or care processes for each particular decision.

The practical process hinges on the individual's understanding of the consequence of their decisions on a short, medium and long-term basis. If their understanding cannot be established, a decision may be made for them by professionals. This decision must be made within their best interests, considering a balance of the guidance within MHA.

In litigation and engagement with the courts there is specific guidance which outlines the support and assistance which must be offered to vulnerable litigants. This is particularly relevant when required to give evidence and personally engage in the processes of litigation.

If these assessments are not carried out correctly, there is a clear risk that some of the most vulnerable in our society will be excluded from the forum for formal redress and ultimately have no access to the justice system. There is little difference between limited or ineffective access and having no access at all. Strong consumer protection and appropriate assessments of the capacity of consumers are therefore fundamental to upholding a legal system which is fair and representative of their needs.

Even where an individual has full mental capacity, they may suffer from other vulnerabilities which affect their decision-making while not meeting the threshold for legal intervention in their decision-making. The ongoing focus of many law firms on vulnerable consumers and their needs is important and should be encouraged. Collaboration, the sharing of findings and the promotion of best practice is essential to identify vulnerable consumers and ensure they face no barriers to accessing justice.

Author: Duncan Faulkes, the Association of Consumer Support Organisations (ACSO) secondee and trainee solicitor at Lyons Davidson Solicitors.