CompaniesMar 30 2015

Another firm to ‘just say no’ to insistent clients

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Another firm to ‘just say no’ to insistent clients

Another firm has signalled its agreement with the Personal Finance Society’s campaign to get advice professionals to ‘just say no’ to insistent clients in the wake of new pension freedoms, with Walker Crips’ compliance head telling FTAdviser it will refuse to process business.

David Hall said advisers offering retirement advice to clients after April will be told to refuse to process any business that ignores recommendations. He said this had always been its general stance, but that it would now be “set in stone - it will be the only option”.

“We have had the past The Pension Review - the pensions mis-selling scandal and I believe this could escalate into something very similar.”

He added that the articles he had seen from the Financial Ombudsman Service suggest that “the adviser may be culpable”. Essentially the fear is that by processing a request the adviser could be deemed to have supported the decision and be liable to future claims.

In the past advisers have lost ombudsman claims over execution-only transactions which were subsequently ruled to contain an element of advice.

There have been concerns that once the pension freedoms come in next month there will be an influx of clients who will want to access cash for inappropriate investments, drain their fund or transfer out of their defined benefit pension scheme.

After next week, it will be mandatory for those with defined benefit pension pots to get regulated advice if they wish to transfer unless the pot is less than £30,000, but they are not obliged to follow the advice.

The area is emergin as a key battleground of the reforms, after PFS president Keith Richards made statements that all professional advisers should refuse to work with insistent clients until more clarity is offered on protection from claims.

In a letter reported by FTAdviser this morning, Mr Richards said the government and the FCA must deal with this issue and should change the policy for those clients that ignore advice.

Not all adviser agree with the stance. In a blog post published today (30 March) on FTAdviser in response to the comments from the PFS, Richard Leonard, PFS member and chartered financial planner at Kirk Newsholme Financial Planning, said advisers should continue to help clients.

He writes: “I fully understand my responsibility to help clients avoid making bad decisions, but to suggest that we “say no” to any insistent client is, I believe, unreasonable. This would be to adopt an approach that many other professions would not follow.

“Would a barrister who advises their client to make a guilty plea based on the evidence, refuse to defend them if they plead not guilty?”

Mr Hall said that Walker Crips is making sure all of its advisers are fully aware of its new policy and when a recommendation is made, particularly in pensions, it will be stuck too. He added he had spoken to a number of firms who were in agreement and that none he spoke to had disagreed.

The Personal Finance Society has warned that the government and Financial Conduct Authority run the risk of creating a future mis-selling scandal that will bring future claims on advisers if they do not address the issue of ‘insistent clients’ acting against professional advice.

In February this year at FTAdviser’s retirement freedom forum, the FCA’s head of policy for distribution, Maggie Craig said that advisers should decided on a “case-by-case basis whether or not to turn away clients insisting on a course of action that defied a recommendation.

Mr Hall added: “It needs the FCA, the government and the ombudsman to find a way around this and find a solution to this issue. The government needs to come to some agreement with the FCA and the ombudsman.”

ruth.gillbe@ft.com

Additional reporting by Ashley Wassall