Regulation  

FCA data request sparks warning from law firm

FCA data request sparks warning from law firm

Law firm RPC has warned advisers to be vigilant over ‘insistent clients’ and pension transfers as the regulator carries out data gathering.

The warning came after the FCA sent questionnaires in November to 400 firms, asking them to confirm whether they have provided advice on transferring from defined benefit to defined contribution pension schemes.

RPC explained that the questionnaire was sent to 400 firms, from small IFAs to networks, banks and insurers, although the questions relating to insistent clients and pension transfers were aimed at IFAs.

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The request forms part of the FCA and the Treasury’s wider Financial Advice Market Review.

An FCA spokesman said that the data request is designed to help it understand the relative prevalence of risks in relation to insistent customers and pension transfers.

She said: “While we have anecdotal evidence on these two areas, as well as data from providers, we are supplementing this quantitative data from the advisory market through this request.

“This is the first time we have sought quantitative data on these two issues, and the data will be used by the FCA to help inform our work generally, including supervision.”

The regulator has previously detailed that advisers should follow a three-step procedure when faced with insistent clients. Firstly, IFAs should provide suitable advice; secondly, they should make it clear that the client’s actions go against this advice; and thirdly, they should make the consequences of such an action clear.

Rory Percival, technical specialist at the FCA, has also reiterated the importance of properly documenting such sessions, in order to protect against any future complaints.

Adviser view

In a newsletter to its adviser members, IFA Compliance highlighted the letter and what it entailed.

The newsletter said that, if an IFA confirms that it gives advice on pension transfers, the FCA requests details on how the IFA handles insistent clients, that is; where a customer demands a pension transfer notwithstanding the adviser’s contrary advice.

IFA Compliance commented: “While it is possible to handle insistent clients, the liability for arranging contracts comes with it, regardless of the advice. All the warnings in the world will not absolve a doctor from prescribing an unsuitable drug.”

peter.walker@ft.com