RegulationNov 24 2015

FCA denies responsibility for insistent client issue

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FCA denies responsibility for insistent client issue

The Financial Conduct Authority’s head of pensions policy said it is not the regulator’s role to tell advisers what to do with insistent clients.

Speaking at Marketforce’s Retirement Solutions Forum yesterday (24 November) Maggie Craig said it was the role of the regulator to set the rules within which advisers can make a decision about insistent clients.

“I know there are differences of opinion about whether you should transact the business for an insistent client. Some advisers feel you should help them make the best of a bad situation while others disagree.

“Our rules don’t say you should do one or the other.”

She added that the industry should not talk about getting advice as if it were a barrier between consumers and their savings.

Speaking to FTAdviser, Personal Finance Society chief executive Keith Richards said it is important to be absolutely clear that the FCA are neither saying that facilitating an insistent client transaction is wrong or right.

He said the regulator is simply saying that if an adviser chooses to facilitate an insistent client instruction then they should follow the three stage process.

Mr Richards noted that the issue remains that ‘insistent client’ does not form part of the official Conduct of Business rule book but always acting in the ‘best interests’ of the client is.

The PFS is seeking confirmation from both the FCA and Treasury about whether advisers will be in breach of COB rules by transacting an activity against the clients best interests.

Also at the Marketforce event in London, Ms Craig admitted the introduction of a secondary annuity market will be a challenge, as the regulator prepares to start work on the policy’s introduction.

She told the Retirement Solutions Forum she was “very glad” its introduction was delayed by a year. “We are conscious that we need to give the industry as much certainty as possible. We would expect to consult during 2016. There are a lot of questions still unanswered about this.

Ms Craig said there are two particular challenges.

“The first is that many of the consumers in this base may well be more vulnerable than your average consumer, they are likely to be older and they are likely to be at a stage in their life where their cognitive faculties aren’t what they used to be.

“The second is that in most markets the customer has some sort of idea what they are sell or buy is worth.