Many advisers are still set to steer clear of ‘insistent’ clients, despite the regulator publishing an update yesterday stating that advisers are able to advise on transactions or decisions that go against recommendations.
The factsheet was published in response to queries on the issue raised in feedback to its consultation paper about changes to pension transfer advice rules. The issue is outside of the scope of the original consultation, it stated.
The Financial Conduct Authority said there is no rule to prevent advisers from transacting business against their advice if the client insists on doing so, but gave examples of good and bad practice and reiterated previous guidance to document the process.
However, advisers that FTAdviser spoke to were not swayed by the latest guidance.
Justin King, chartered financial planner at Dorset-based MFP Wealth Management, said he would not take insistent clients on, stating that the “risk to me is too much”.
“If I didn’t believe it was the right outcome for the client I wouldn’t do it. Insurers won’t do it without advice and advisers don’t want to do it, so there is a problem. But I’m not sure if it’s my problem.”
Lee Tomkins, managing director and independent financial adviser at Taunton-based Blackdown Financial, agreed that it’s just an area of business that from a liability point of view people do not want to get involved in.
“The FCA have been left in a very difficult situation because they didn’t know this was going to happen, because the government have changed the parameters of how this works.
“The FCA are scrambling because they are in the same situation as us. Until all the things are in place why would you want to touch it. They have been put in the same boat as we have: a warning or a pre-consultation from the government in the industry would have been worthwhile.”
Carl Lamb, managing director of Norwich-based Almary Green, agreed that advisers should steer cleer of insistent clients, warning that “otherwise you are leaving yourself wide open to potential mis-selling claims/bad advice at some point in the future”.
“[If advisers do not steer clear] they carry the risk of a large PI claim based on retrospective legislation.”
Daren O’Brien, director of Aurora Financial Solutions, believes the FCA should continue to review its stance as client preferences continue to change, especially in light of recent pension changes that have meant more clients become insistent on what they want.
“This insistence may not mean the industry’s view on insistence, whereby it’s someone not taking our ‘advice’, if clients were willing to wait for the information and understand the procedures better they may not be so quick to insist.”
He added that the internet has changed many clients’ perception of ‘advice’ and also how quickly they think insurers should process things.
“I think clients expect to change and switch complex financial products quickly and as simple as buying some shoes that will be delivered in the morning which is never going to happen.
“We have had prospects contact us who only want us to rubber stamp a transfer as the insurer has insisted upon it, which we declined to do until we had provided and charged for the ‘advice’ which may have meant our advice not being to transfer.”
The Personal Finance Society, among others, has been campaigning for greater safeguards against future claims in order for advisers to transact insistent business. Chief executive Keith Richards has also warned such clients could generally undermine the case for professional advice.
As previously revealed by FTAdviser, some advisers are being asked to sign documents stating that advice has been given when none has, so that consumers can circumvent new rules that require insurers to check advice has been received before agreeing to transfer a defined benefit pension.
Under new regulations that were proposed earlier this year, and reiterated yesterday (8 June), anyone with a DB pension pot of more than £30,000 must seek regulated financial advice, though they are not obliged to follow the recommendation given.
ruth.gillbe@ft.com
