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FCA eyes insistent transfers adviser guidance


FCA chief executive Martin Wheatley says the regulator plans to issue further guidance to advisers about how to deal with insistent client pension transfer requests.

The issue of insistent transfers has been brought to the fore following the introduction of pension freedoms in April. People with defined benefit pensions worth more than £30,000 who want to take advantage of the new flexibilities are required to take advice before transferring to a defined contribution scheme.

This has created a tension between advisers and clients, with advisers concerned they risk being held liable for losses by the Financial Ombudsman Service if they process a transfer following a negative recommendation.

Experts have warned DB savers could be left frustrated if they are unable to find an adviser willing to process their transfer, while there are also concerns unscrupulous firms may be willing to rubber stamp unsuitable transfers.

Following a keynote speech at the Lansons Future of Financial Services conference in London today, Money Marketing asked Wheatley whether he recognised advisers’ concerns about insistent clients.

He said: “Yes we recognise the concerns. Lots of people want to access their cash and clearly there is a requirement they take advice, particularly when transferring out of a DB scheme as that is quite complex.

“DB values are quite high at the moment so people are quite seduced by those offers.

“I’m very aware it is a concern that firms have and we are looking at what further advice we can provide to help them deal with insistent clients.”



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There are 15 comments at the moment, we would love to hear your opinion too.

  1. Closing the door after the horse has bolted?

  2. We would also need a guarantee that FOS will stand by the guidance,and the FCA must be definitive to the extent that any adviser who follows the guidance is protected against future claims. The usual wishy washy ” we leave it for you to decide” will not be sufficient.

  3. I tried writing to our useless (conservative) MP about the problem, but like many people in Teignbridge, got no response. It needs the Government to recognise that the FCA / FOS are out of step with reality when it comes to people wanting to take THEIR money from their plans.
    This doesn’t mean I’m happy about processing requests that I don’t think are appropriate, but it is the client’s prerogative to take advantage of the government’s relaxation of rules.

    • I’m shocked you got no response. If You have a copy of the letter pass it to me – David Cameron is my MP and has answered every letter I’ve ever sent, I can also let him know that your MP is not doing his/her job…

  4. A positive step that they acknowledge the problem and one worth watching particularly if they succeed in applying a bit of common sense. Not a trait always associated with the regulator granted but at least it sounds like they are trying to address the issue which is all good as far as I am concerned.

  5. Advisers need to remember that they have been asked for their professional advice, and be prepared to advise clients not to transfer if that is the appropriate recommendation – and charge for that advice rather than charge only if a transfer is recommended; it is dangerous to feel obliged to facilitate an unsuitable transfer as that is the only way to be paid for their professional service.

  6. Each time I read one of these insistent client articles from something said by someone at the FCA it always refers to DB transfers only. What about clients wishing to access a large lump sum from say a flexi-access drawdown contract against your advice to do so as these in my opinion are more common?!

  7. The real scandal will be those consumers that having been refused by a regulated adviser due to the lack of clear guidance and rules, will seek alternative options on line, straight into the hands of the fraudsters and scam artists. Then and only then, when they are receiving bad press will they take some responsibility and issue clearly documented and binding solutions of all to follow.
    Its just a shame as always many will need to suffer financial loss before the regulator takes responsibility and become liable for the outcomes, instead of waiting to point the finger and judge in retrospect.

  8. John Hutton-Attenborough 3rd June 2015 at 8:58 am

    The guidance is easy. There should never be an “insistent client” scenario for a DB transfer. Simple! It is either a Yes in which case facilitate the transfer or No in which case refuse to go any further.

  9. Julian Stevens 3rd June 2015 at 10:34 am

    David Hedge ~ Good post, though what we should never forget is that we are considered, by the powers that be, responsible for the outcome of whatever transaction we facilitate, regardless of our advice and even regardless of whether we earned any money for it. Years down the line, when the client realises he did the wrong thing and is looking for someone to blame (and pay) for his folly, there’s a good chance that (with the aid of a CMC) he’ll try to hold the adviser responsible even if all he was told was that by going direct he could access his benefits as a lump sum or transfer their value into an Income DrawDown plan that hasn’t done what he expected.

    And of what value will proof of advice be if the provider doesn’t establish exactly what that advice was and, if it was not to do what the client wants, refusing to facilitate it? Who will the client seek to blame then? As I understand it, the FOS won’t be interested in a complaint about a non-transaction, so to which party might a complaint be addressed?

    As advisers, our top priority has to be to ensure is that any complaints don’t come our way, because there’s a good chance that the complainant will present a decidedly slanted record of his dealings with us and, anecdotally, the FOS tends to side with the complainant’s version of events, even upon production of a signed disclaimer. “Oh that, well, I didn’t get a chance to read it properly. Mr Smith waved it under my nose and said it was just a formality, but I was never given a copy. I’m a simple man, I don’t understand these things, I put my trust in Mr Smith and believed he’d help me do the right thing, but it’s all gone bad”. Ah yes, says the FOS adjudicator, Mr Smith obviously failed in his duty of care so……complaint upheld.

  10. Why would any adviser worry about an insistent client? It’s a ridiculous situation. If there was ever a fantastic opportunity for those struggling with charging of fees for advice, this is it. Lets be brutally honest here for a moment. If you have 20 people come to you asking for advice on DB to DC scheme transfer to take advantage of the reforms, chances are that for 18/19 it is unlikely to be suitable. Explain to every single one at the initial meeting you charge for your advice process, the report and recommendations and then charge a much larger implementation fee if it is to proceed. Tell them if YOUR recommendation(s) will always be to do what is in THEIR best interests and if this is not to transfer, under no circumstances will you subsequently go on to facilitate it if they still wish to proceed. Explain that you will reinforce this in your report by confirming the level of income you are giving up by recommending they do not transfer which should confirmation of your previous statement you’re acting in their best interests. For the other 1 or 2 people it may be in their interest to transfer, then they are not an insistent client.
    How many advisers out there have, in the past have done, what the client wanted to do if it was a not suitable????? I would suggest not many. Of the remaining minority who were order takers, not advisers, I would submit they simply created a client file which was designed purely to make the sale fit what the client “needed” in order to try to justify the sale. Low and behold when it went wrong, who step? The FoS and CMC’s. Hey presto these idiot order takers get rightly screwed. Problem then was the FSCS steps in as the order takers have gone out of business and we end up footing the bill.
    I never thought I’d hear myself say this but I think the FCA should be firmer and have the b*lls to stand up and say “We have looked at this again and have decided that there will be rules to forbid any adviser to do a DB to DC transfer unless that is their recommendation.”
    Insistent client????
    My a*sre!!!!!
    No such thing – as always IMHO

  11. There is a simple solution for the “Insistent Client” it is called an “Insistent Adviser”

  12. No mention of critical yield on here.

  13. John Stimpson 8th June 2015 at 9:46 am

    I believe that this issue will shortly become far more prevalent, as I understand that the rules are soon to be extended to cover any transactions that result in the loss of “safeguarded benefits” from DC pensions. As far as I can see there is not, as yet, any specific definition of “safeguarded benefits” but it is expected to include guaranteed annuity rates, guarantees relating to with profits investments etc. In this case, there will be a huge increase in the number of cases where consumers are obliged to take advice. Some providers are already taking this extension into consider; I’ve seen a case with Pru where they would not process a policyholder’s request to take an old Retirement Annuity Contract as a lump sum unless the policyholder had received regulated advice. This was because the policy included some guaranteed benefits. The confirmation slip (to be signed by an adviser) didn’t ask if the advice had been to proceed or not, simply to confirm that “appropriate advice” had been given. In this case the consumer is very astute, knows the benefits that they will lose and has made a calculated decision to proceed. Many advisers have refused to take the case on and the cheapest fee they’ve been quoted is £1500, on a gross fund value of £57k.

  14. The mere suggestion of ‘any’ fee being charged tends to send these people running for cover anyway. Non-issue, just don’t do it and refer them to their provider for direction (make notes though).

    If the need to make a profit from every client/customer interaction is your driver (as it will be for some unfortunately), then you take whatever comes with that I’m afraid (regrettably, some firms and individuals will and then probably dump any future liabilities FSCS-style on the rest of us, which is what ‘really’ concerns me about this whole pension freedoms situation)!

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