One of the prime reasons that the Treasury is now directing a review of the FCA and how it works is that the FCA’s stance on insistent clients is effectively obstructing implementation of the new unfettered access provisions announced by George Osborne.
Understandably, the FCA does not want to facilitate a free-for-all enabling intermediaries to facilitate courses of action contrary to best advice.
For its part, the government’s position is that if cashing in their pension funds is what people want to do, wisely or otherwise, the law now says they can. The responsibility of advisers should go no further than warning clients of the potential pitfalls of doing so. But plainly, it is highly likely that it will (not least because Fos commonly disregards signed disclaimers of liability), so intermediaries will not do it.
For their part, many providers are seeking to absolve themselves from liability by insisting that policyholders must provide proof of having taken advice. Yet they do not seek to ascertain what that advice actually is because, if it is that the policyholder should not encash, what would they do then? Block it?
And advisers certainly will not state that they have given full advice – which many policyholders do not want to have to pay for – when in fact they have not. They would be mad to do so.
So we have a fundamental conflict between government and regulatory policy.
It is all a dreadful mess and the only way out of it is for the Treasury to direct the FCA to issue an unequivocal statement – on which it will not be allowed to renege at a later date – that if the client has signed a disclaimer absolving the adviser from any liability for the consequences of encashing his pension fund contrary to advice, that will be it, and the policyholder will have to accept full responsibility for his actions.
Julian Stevens
Financial Advise,
Harvest,
Bristol
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