The topic of how the advisory industry tackles the issue of insistent clients is one that provoked impassioned responses from members of the panel. Mr Gibson’s tactic is to simply decline business from these clients, as they pose too big a risk of future compensation action, he revealed.
Mr Burrows said: “You [the adviser] are stuck between a rock and a hard place here. I think there is only one way to give advice and that is the right way. My approach to insistent clients is that if you deal with me, you deal with my terms.”
Financial advisers must be proactive in taking steps to ensure they protect themselves from future claims, according to Mr Ellison. This includes getting insistent clients to put in writing that they have chosen to act against advice and risk warnings.
He added: “It is really hard. Have in mind ‘what would the Fos say in three years’ time when somebody complains that they have lost a few bob. What will happen when interest rates go up? What would happen if something goes wrong?
“The insistent client has to have the right to do whatever they like with their own money. At the moment that is hard. They want to do things that you and I know is not sensible.
“Until we get to grips with responding to the regulatory framework to try and get it to a better stage, I’m afraid that you have to make sure that your PI [professional indemnity] cover is paid for.”
Mr Ellison lampooned the FCA, and referred to it as a “dysfunctional organisation, for not delivering a proper response on the matter. Some day somebody has got to stand up at the FCA and say if a client insists on something then that is fair enough.
“The exposure for IFAs is pretty hard. All regulators deny, on oath, that they practise hindsight law, but they all do. None of them comply with the Regulators’ Charter. Regulators cause trouble. They are not thinking of the consumer in a holistic way.”
In his keynote that followed immediately after the panel session, Rory Percival, technical specialist at the City watchdog, hit back at the claims – highlighting that the regulatory body had published a factsheet earlier in the year that outlined three steps to help advisers deal with the scenario.
Mr Percival said that advisers needed to make sure they gave advice on the suitable course of action for the client based on their circumstances and this was a “rule-based requirement”.