A survey of 1,884 members found more than 80 per cent would not set up one of these so-called ‘insistent client’ transfers if they thought the process not in the best financial interest of the client.
Just 16 per cent said they would consider executing a transfer in line with Financial Conduct Authority guidelines, with only 1 per cent agreeing to do so on the basis of not wishing to turn a client away and into the unregulated advice arena.
Only 2 per cent of all the advisers surveyed would comply with a client’s wishes whatever the financial outcome, in support of the new pension freedoms.
Earlier this year, the regulator outlined the three steps advisers must take when encountering a client that insists on transferring their pension pot, which included proper documentation of the decision.
Late last month, the FCA’s manager for retail investment themes Ritchie Thomson noted the insistent client issue was still an open question and something the regulator is looking at.
PFS chief executive Keith Richards commented pension transfers can be a complex area of advice and not all advisers are suitably qualified in areas such DB schemes, which can include extremely valuable safeguarded benefits which should not be given up lightly.
“In addition, many advisers are wary of what has become known as ‘insistent’ transfers and the so-called ‘insistent’ clients, due to the likelihood of irreversible poor client outcomes and regulatory repercussions.
“The financial adviser community is rightly concerned about the longer term ramifications under the current regulatory guidelines where clients see it is their right to instruct a transfer against professional advice,” he added.
The PFS first raised concerns about insistent clients with both the government and Financial Conduct Authority back in March, highlighting the need for greater protection and clarity for the public and the advice profession.
Mr Richards called for urgent change to allow consumers who are insistent on making their own informed decisions to accept the responsibility of doing so.
“Over 50 per cent of our members surveyed have been approached to facilitate DB to DC transfers without advice. Faced with a refusal, clients naturally become angry and confused; frustrated by what they see as a conflicting restriction to prevent them accessing their cash,” he said.
As the recent FTAdviser guide on the subject pointed out, insistent client issues can also have a bearing on the level of professional indemnity insurance advisers have and are able to renew.