Lawyer says FCA is ‘grotesquely dyfunctional’ over insistent clients
The FCA is a “grotesquely dysfunctional organisation”, a senior pensions lawyer has claimed.
Robin Ellison, head of strategic development for pensions at Pinsent Masons, told a packed room of advisers in Edinburgh that the FCA had failed to deliver a “proper response” on insistent clients.
Speaking at the FTAdviser’s retirement freedoms forum on 24 September, Mr Ellison said that the City watchdog had created a poor environment post-pension freedoms, especially for advisers.
He said the FCA had delivered a “wishy-washy” response on insistent clients, “not a real response”, and warned that the regulator should not penalise advisers for “little old ladies wanting to be silly with their money”.
He added: “There is not a safe haven for advisers. Giving advice now is a minefield. Because things are changing so rapidly, it is really complicated. Some day somebody has got to stand up at the FCA and say if a client insists on something, that is fair enough.
“The exposure for IFAs is pretty hard. All regulators deny, on oath, they practice hindsight law but they all do. None of them comply with the Regulators’ Charter. Regulators cause trouble. They are not thinking of the consumer in a holistic way.”
He told fellow panellist Rory Percival, technical specialist at the FCA, that he worked for a “grotesquely dysfunctional organisation”, adding: “The consumer is exposed because of the cost of advice and the cost of advice is made complicated because the law is complicated. The bottom line is the consumer is losing out largely because of the regulatory framework”.
Mr Percival hit back at the claims that the FCA was wishy-washy. He said the regulator had published a factsheet on insistent clients, stating the three-page document clearly spelled out the three key steps advisers needed to take with those who did not follow advice.
He said advisers needed to make sure they gave advice on the suitable course of action for the client based on their circumstances and this was a “rule-based requirement.”
Mr Percival added: “It is important you give this advice. This is the normal advice process. If the client insists on doing something, or not doing something, then you can’t bypass what you have to do as an adviser.
Adviser View
Nigel Tyrrell, founder of Cambridgeshire-based Tyrrell and Company, said: “Say I decide I want to cash in my defined benefit pension. The FCA says I need to take advice – but whether I cash in or do not cash in, both these options come at a cost.
“Plus if the advice says do not cash in, I must sign a form to say I am an insistent client. The result is that I can do what I originally wanted to do, however at a cost.
“Pension freedom should mean just that – the freedom to do what I want with my own money.”
