Regulation  

FCA and Fos respond to adviser pension claim concerns

FCA and Fos respond to adviser pension claim concerns

Advisers need to keep “clear records” of both their recommendation and the client decision to ignore this if they process transactions for ‘insistent’ retirees seeking to access or transfer their pension, the Financial Conduct Authority has told FTAdviser.

A spokesperson for the regulator was responding to FTAdviser enquiries following the latest in a series of interventions from the Personal Finance Society, which has called for a guarantee against future claims if advisers are to continue to support so-called ‘insistent’ clients.

In the wake of the story, advisers called for guidance from the FCA to prevent claims if they decide not to abandon clients that wish to ignore their warnings. The regulator said advisers should keep ‘indefinite’ records, but could not guarantee they will not ultimately be held liable for poor outcomes.

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“Where an individual insists on going ahead with the transfer, even when the advice is against it, the adviser should set out their advice clearly in writing and keep it, along with a clear record that the customer has insisted on proceeding.”

FTAdviser also spoke to the Financial Ombudsman Service, which 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.

A spokesman said it is still the early days and it has not yet seen any ‘insistent client declarations’. It also similarly emphasised it could not guarantee a way to avoid claims, but said it was rare to find against firms over non-advised processes.

“We can’t give advisers a definitive assurance that they won’t face a case with the ombudsman, but if they do what they do best, it won’t come to that.

“The FCA’s existing rules on fact finds and suitability documents already provide scope for a financial adviser to record what they’ve recommended (or not) and why. So should a complaint arise, the ombudsman can form a balanced view of the nature of that advice.”

The spokesman also flagged up that in the majority of execution-only cases it has seen, advisers have not been held liable. In the few cases they have there have been exceptional reasons, he added.

“It is extremely rare when we find against an adviser in an execution-only case but if, for example, there has been a three-hour closed door presentation, there could have been a heavy push towards a product.”

Since the pension reforms came in a week ago, there have been a number of concerns raised that advisers would be held liable if they carry out a transaction, even if they have advised against it, particularly in the case of defined benefit transfers.

From last week, anyone who wishes to transfer out of a DB pension to capitalise on the reforms must obtain regulated financial advice, unless their pot is less than £30,000. They are not obliged to follow recommendations, however.