Advisers should tell ‘insistent clients’ to put in writing why they chose to ignore their adviser’s advice, the regulator said, stating “you can’t argue with something in their own words”.
Speaking this morning at an Association of Professional Financial Advisers’ seminar in London, both Harriet Myles, an outreach officer from the Financial Ombudsman Service, and the Financial Conduct Authority’s technical specialist for retail Rory Percival, tackled the issue of ‘insistent clients.’
Ms Myles said so far the Fos has not seen any complaints filter through about clients that want to take a particular course of action, often a pension transfer, even after advice to the contrary.
She said: “Advisers we speak to seem to be coming up with good solutions on how to deal with them, things like cooling off periods and making these clients put things in their own words.”
Mr Percival re-stated the regulator’s position on insistent clients, agreeing that advisers must make it clear that they are acting against advice and risk warnings.
“This hasn’t always been the case, if warnings are all in the same suitability report then it might look like ‘a nod and a wink’, while adviser generated disclaimer forms can easily just become just another bit of paper to be signed without being properly read,” he said, adding that “you can’t argue with something in their own words”.
He also warned advisers to be weary if they operate on a transaction contingent basis in terms of getting paid, as this could lead to conflict of interest issues if a complaint comes in further down the line.
The Fos has been at the centre of the debate because it can apply ‘common sense’ judgement in hindsight in the event of a future complaint and is not required to rule solely on the basis of regulations in place at the time.
Elsewhere at the event, Ms Myles responded to questions from advisers who were critical of the ombudsman’s “direct language” and lack of flexibility in terms of turnaround time when requesting documents for a case.
She asked whether the problem might be to do with the new alternative dispute resolution rules the Fos has to abide by, which require complaints to be resolved within 90 days, bringing it in line with EU standards.
FTAdviser previously reported that the Fos was so far unclear about how it would deal with the new time limit, but Ms Myles admitted that the requirements “were starting to rush things”, while in terms of the specific complaint she added that “we need to look at this” [giving more time to gather evidence].
Chris Hannant, Apfa director general, interjected by stating that a common complaint from members about the Fos was inconsistent in terms of how complaints and evidence gathering is dealt with by adjudicators and ombudsmen.
“Sometimes a member of Fos staff will have had an angry adviser on the phone and that experience will reflect on the next adviser they deal with. What we are asking for is for there to be consistency in the way we are all dealt with.”
Another comment from the audience was on unregulated collective investment schemes and the perception that they almost always necessitated action by the Fos.
Ms Myles assured advisers that there was no such predisposition against Ucis and with all cases there are “no givens”, with even legacy complaints where historic files have been lost being treated on their individual merits.
“Our job is to fill in as much of the story as we can,” she added.
peter.walker@ft.com
