Are insistent clients justified?

He says: “Freedoms are great in principal, but there will inevitable be a range of unintended consequences which have already materialised in the US and Australia.

“We want to make sure that consumers who engage with professional advice can rely on the best outcomes from people who have the knowledge, experience and integrity to always act in their best interests.

“Facilitation will be considered a conflict of interest in the future, especially where fees were dependent on the transfer or ongoing fees are charged to manage funds - we need to avoid a national pension scandal mark II.”

There are two main types of insistent clients emerging as a result of mandatory advice for ‘safe guarded benefits’, says Mr Richards.

The first is one who doesn’t want advice – it is ‘their money, their choice’ and often they resent being forced to take advice and find it even more annoying they are required to pay for something they don’t want.

Some will just call an adviser and ask how much it costs for sign-off, Mr Richards says.

When it is this clear from the outset that the consumer only wants facilitation, Mr Richards says why would any professional want to charge someone for a service they don’t want, or value, let alone get to the point of facilitating a transfer should they believe it to be against the client’s best interest?

The second is where the consumer understands the requirement but doesn’t like the outcome when the personal recommendation is not to transfer.

As previously mentioned, Mr Richards points out the ‘insistent client’ process is not in the rule book and therefore not something he is confident advisers can rely on.

However he says always acting in the client’s best interest is a requirement and is something future observers would expect professionals to adhere too.

Acting against your own recommendation and the client’s future financial well-being just because the client is insistent doesn’t mean they know better than a qualified professional, or that it is right to help, Mr Richards says.

Mr Richards says: “Doing the right thing, even if it means walking away from a commercial opportunity, is what is expected of all professionals, especially when things have ultimately gone wrong.”

Despite the FCA refusing to ‘close the door’ on insistent client cases, Linda Todd, head of operations at Bankhall, says the regulator clearly does not expect firms to be transacting significant volumes of insistent client transactions.

She says advisers should ensure any recommendations are not ‘client-led’ and each case is based on the client’s individual circumstances.

Ms Todd says firms should ultimately judge case-by-case whether they should be transacting business for a client that goes against their advice and clearly avoid doing so where it would cause obvious client detriment/poor outcomes in order to uphold the firm’s duty of care to its clients.