PensionsNov 26 2015

FCA says you must document rejecting insistent clients

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FCA says you must document rejecting insistent clients

Speaking at an Institute of Chartered Accountants of England and Wales conference this morning (26 November), the FCA said their concerns in the past about advisers denying clients access to pension freedoms have stemmed from poor documentation.

Ritchie Thomson, manager for retail investment themes in the FCA’s Supervision Investment, Wholesale and Specialists division, said advisers need to be keeping records of why they reject insistent clients requests.

He said: “I don’t think it’s a difficult thing to do and we’ve got nothing against firms having an insistent client process in place.

“It is not our role to say any adviser of provider should accept this business, but we are concerned that people might be being denied access to the pension freedoms.”

Mr Thomson said that the insistent client issue was still something of an open question and something the regulator was looking at.

In terms of guidance, he stuck to the three steps outlined in June, noting that when the FCA looks at a file, it needs to be clearly explained what the initial advice was.

“The risks must have been have been properly highlighted to the client, advisers sometimes fall down in recording this.”

His comments come as FTAdviser published a Guide to Handling Insistent Clients.

In the FTAdviser Guide, Keith Richards, chief executive of the Personal Finance Society, said that 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 FCA is simply saying that if an adviser chooses to facilitate an insistent client instruction then they should follow the three stage process.

Mr Richards said 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.

Earlier this week research conducted by the Personal Finance Society revealed more than 80 per cent of advisers say they would refuse to facilitate a defined benefit pension transfer if they deemed it not to be in the best interests of their clients.

Of the remainder, 16 per cent said they would consider the facilitation of a transfer in line with Financial Conduct Authority guidelines and just 1 per cent would do so on the basis of not wishing to turn a client away and into the unregulated advice arena.

That left only 2 per cent who were willing to comply on all occasions in support of the new pension freedoms.

The findings come after 1,884 members took part in the society’s annual member survey, with more than 1,100 advisers responding to a specific question on ‘insistent clients’.