Regulation  

FCA clashes with lawyer on ‘insistent clients’

FCA clashes with lawyer on ‘insistent clients’

Rory Percival, technical specialist for the Financial Conduct Authority, has hit back at a lawyer and former chairman of the National Association of Pension Funds, who branded the regulator ‘wishy washy’ on insistent clients.

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 FTAdviser’s retirement freedoms forum yesterday (24 September), Mr Ellison said the FCA had delivered a “wishy washy” response on insistent clients “not a real response”.

Article continues after advert

Mr Ellison said the regulator should not penalise advisers for “little old ladies wanting to be silly with their money”.

He said: “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. Looking at what is coming out of the Financial Ombudsman Service and the Pensions Ombudsman the thing which is a complete breach of human rights is this hindsight decision making.

“All regulators deny, on oath, they practice hindsight law and they all do. None of them comply with the Regulator’s Charter. Regulators cause trouble. They are not thinking of the consumer in a holistic way.

“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 Ellison added that Mr Percival works for a “grotesquely dysfunctional organisation”.

“There is not a safe haven for advisers. Giving advice now is a minefield. Because things are changing so rapidly, it is really complicated.

“To be an IFA now is a really tough job and nobody is helping the IFA give advice at a price that is sensible for people to be able to use.

“One day somebody will lock all these guys (regulators and government) into a room and get them to work out a system where it is possible to give sensible advice at a sensible price to sensible people. It needs to happen.”

However, Mr Percival said argued that the regulator had published a factsheet on insistent clients, stating this three-page document clearly spelt out the three key steps advisers need to take with those who do not follow advice.

Once again, he reiterated the three steps.

He said firstly, advisers need to make sure they give advice on the suitable course of action for the client based on their circumstances and this was a “rule-based requirement.”

Mr Percival said: “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.

“If a client comes to you, for example, saying they want to get cash out of their pension, if you think about it that is not an objective that is a solution. You have to say ‘What is it you are trying to achieve?’