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FCA hits back at PFS ‘dodging insistent client issue’ claim

FCA hits back at PFS ‘dodging insistent client issue’ claim

The Financial Conduct Authority has hit back at claims from the Personal Finance Society that it is “dodging” the ‘insistent client’ issue, stating it has published guidance for advisers.

As part of the work and pensions committee ‘pension freedom guidance and advice inquiry’, the PFS submitted evidence asserting that the public deserves improved access to regulated advice to enable better informed decisions and future outcomes.

Amongst other things, the professional body demanded clarity over insistent clients.

Earlier this year, FCA technical specialist Rory Percival outlined a three-step process to help advisers not get caught out by insistent clients. He said they should provide advice in a concise manner, emphasising the need to ensure the client’s understanding of the recommendations.

Secondly, advisers should make clear what the risks are if a client wishes to go down a different route to the one the adviser has recommended. Finally, if the client decides to go ahead, advisers must be clear that this was not their recommendation.

Everything should be well documented, the FCA added.

However, Keith Richards, the PFS chief executive said: “Whilst the FCA is promoting the use of a three-step process to overcome the problem, it will not confirm whether or not it is acceptable for an adviser to facilitate transfers against suitable advice and the best interests of a client.

“The frustration over a process which forces a consumer to take advice when they don’t want it, must be addressed, especially when in the same breath the government and regulator say it is okay to then ignore it.

“Changes need to be implemented here to protect both the consumer and the profession alike, through the introduction of greater certainty around future treatment of retrospective reviews.

“It is wholly unacceptable to continue dodging the issue from both a consumer and adviser perspective.”

A spokesman for the regulator told FTAdviser it has tried to offer clarity on this.

He said: “Earlier this year we published a factsheet that outlined three steps that advisers should take if they are advising an insistent client.

“In that we said that the adviser should ensure any advice is suitable for the client as normal. If the individual insists on going ahead, the adviser should make clear that their actions are against advice and be clear what the risks are.

“A clear record should be kept.”

Last month, FTAdviser revealed that the Financial Ombudsman Service is backing advisers on ‘insistent clients’, as long as they follow the FCA’s guidelines to document that the client declined to follow the advice given.

The FCA also recently requested pension freedoms data from providers as it attempts to evaluate whether barriers are in place preventing savers from accessing their pots.

In a ‘dear CEO’ letter, the FCA requested data from providers on five areas including what options are offered to consumers seeking to access their pension savings, advice requirements for consumers seeking to transfer out of pensions and into decumulation products as well as their treatment of insistent clients.