Pensions  

Treasury keen to tackle insistent client issue

Treasury keen to tackle insistent client issue

HM Treasury is keen to tackle the problem of insistent clients before the secondary annuity market is given the go-ahead, according to the chief executive of the Personal Finance Society.

Keith Richards spoke to FTAdviser after meetings with HM Treasury last week to discuss proposals to allow annuitants to sell their right to future income for upfront cash.

The launch of a secondary annuity market in April 2017 raises the prospect of advisers facing similar insistant client issues to the ones brought about by the rules on defined benefit transfers.

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If advisers boycotted insistent clients for annuities, as they have done with DB transfers, this could frustrate consumers and prevent a market from emerging.

Mr Richards said: “The Treasury is alert to the potential risks and unintended consequences that could stem from greater freedom and choice over the selling of what is effectively a guaranteed income.

“The Treasury has been looking at a number of options, and we have been helping with those discussions.

“The positive thing is that they recognise the importance of this issue. We need to give advisers the certainty that when they are helping the public they are not going to end up feeling the consequences.”

A PFS survey showed that 81 per cent of members say they would not facilitate an insistent transfer if they believed it was not in the best interest of the client.

Last month, Mr Richards said advisers should be prepared to walk away from the secondary annuity market if they find themselves having to act against their clients’ best interests.

One of Mr Richard’s proposed solutions was that scheme trustees and providers would have to ask the client for the outcome of their advice before allowing them to go ahead.

|In 2015, the Financial Conduct Authority published Factsheet 35, which aims to provide help to advisers concerned about how to handle insistent clients. But it has since acknowledged that insistent clients is still a concern for advisers.

A spokesman for HM Treasury said: “The government has recognised a need for greater clarity on the issue of insistent clients.”