Financial advisers should record all conversations with clients and carefully draft their terms and conditions of business to create strong files and protect themselves from future claims, a solicitor representing British Steel workers has said.
Speaking at The Great Pensions Debate in Port Talbot yesterday (11 July), Philippa Hann, partner at law firm Clarke Wilmott, outlined what she looks for in a financial adviser file when a client approaches her with a complaint.
Clarke Wilmott has been appointed by a group of steelworkers in Port Talbot to pursue a legal case against parties involved in the recent defined benefit (DB) pension transfer debacle, as reported by FTAdviser in April.
Ms Hann, who claims she has never lost a court case, said she would turn down cases if there is a contract in place which outlines exactly what the adviser is going to do and not going to do, where every conversation has been recorded and is appropriately filed, and where the client understands what the advice is and what it means.
She said: “The first thing I ask is to see the whole file. It's interesting how often the size of that file will tell me whether or not I'm comfortable with the case."
She told advisers: “Write it down, record it, store it in the appropriate place. Because I've been in court rooms where the adviser is saying 'my usual practice was', 'our policy was', 'what we would have done is', and if it isn't in the file, it didn't happen.
“If you're having a thousand of those conversations a year, you need to write a thousand of those conversations down. Every time I put the phone down from one of my clients I dictate a note of what was discussed.”
Ms Hann said the next thing she looks for is terms and conditions of business.
She said: “I cannot explain to you how important your terms of business are. They don't just cover what your contract is, they lead into every each way that anybody might bring action against you.
“You get to decide what bad looks like in your terms and conditions of business. You get to decide what it is that you're going to advise on, and what it is you're not going to advise on.”
Ms Hann also gave guidance for financial advisers who charge their clients based on the business written.
She said: “If you are going to do contingent charging you need to identify that as a potential conflict. You need to write to your clients to manage that conflict.”
It came to light in November that several members of the British Steel Pension Scheme (BSPS) appeared to be transferring out their pensions after being lured by cheap deals by unregulated introducer firm Celtic Wealth Management & Financial Planning, which then referred the clients to advice firm Active Wealth.
It emerged in February that the firm had advised as many as 300 BSPS clients, of which 64 proceeded to transfer out of the BSPS scheme into alternative pension arrangements without taking further advice.