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FCA in talks with industry and lawyers on insistent clients

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The FCA is in discussions with industry representatives and lawyers on its approach to insistent clients.

Any saver who wants to ditch their defined benefit scheme for a defined contribution plan to take advantage of the new pension freedoms will be required to take advice before transferring.
Industry experts have raised concerns that advisers who process transfers following a negative recommendation could open themselves up to future complaints.

And earlier this month Money Marketing reported the FCA had ordered eight advice firms to carry out skilled persons reports in relation to insistent clients following a thematic review on pension transfers last July.

The review into bulk pension transfer advice on enhanced transfer values found that over half of transfers took place on an insistent basis, and in many cases the reasons for the client acting on an insistent basis were not recorded.

A source close to the discussions says: “The regulator is seeking input on what is appropriate for advisers to do on insistent clients.

“The pension freedoms are an opportunity to seek clarity and firms are crying out for some clear guidance to avoid a repeat of the ETV review.”

Money Marketing understands the FCA has also met with a number of individual advice firms to discuss the issue.

Personal Finance Society chief executive Keith Richards says the regulator’s current policy does not take into account the pension freedoms or the ETV review, but it cannot issue a change in policy without a formal consultation.

He says: “There definitely seems to be a contradiction between the FCA’s stated policy position on insistent clients, and the way its supervisory team is treating them as part of the ETV thematic review.

“The FCA is monitoring the situation very closely and if it sees consumer detriment starting to materialise I am sure it will consult on whether the rules should be changed.

“In the meantime, the profession needs to take the lead and responsibility for its actions, rather than waiting for the regulator to tell it carte blanche what it can and cannot do.”

An FCA spokeswoman says: “Where an individual insists on going ahead with the transfer, even when the advice is against it, the adviser should set out their advice clearly in writing and keep it, along with a clear record that the customer has insisted on proceeding with the transaction.”



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There are 10 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 14th May 2015 at 3:40 pm

    “In the meantime, the profession needs to take the lead and responsibility for its actions, rather than waiting for the regulator to tell it carte blanche what it can and cannot do.” Which is another way of saying the FCA intends to see what advisers do and then, after the event, as usual, it’ll decide whether or not what they’ve done is to its satisfaction. If it isn’t, the FCA will launch another hindsight review and haul over a bed of very hot coals every firm which hasn’t done things the way in which the FCA will by then, finally, have decided it should have done them. But there’ll be no clues in advance, so whatever firms do will effectively be walking into the dark. Oh yes, and in the wake of the FCA’s announcement of its thematic review, all the PII insurers will withdraw cover at the earliest possible opportunity. Ain’t life grand?

  2. The spokeswoman has repeated what was said to me, what she forgot to mention was that the FOS will take no notice of what is in your file and decide against you as you are the expert and should not have allowed the transfer. Until I see it in black and white that I will not be liable I am not playing the game.

  3. Colin Douglas 14th May 2015 at 4:33 pm

    What a farce…meanwhile deferred DB members like me can’t transfer our very modest deferred benefits to our SIPPs because it’s ‘too toxic’ for an adviser or trustees to even contemplate. Talk about a lack of joined up thinking.

  4. michael routledge 14th May 2015 at 5:14 pm

    Sorry Colin but that appears to be the current situation. Like many other firms, we have simply decided not to get involved with ‘insistent clients’ just not worth the risk !

  5. @Colin Douglas – Tell the people who make the rules, we are left between a rock and a hard place. I would happily transfer your DB benefits if it was in your best interests to do so, in which case the current rules are quite sufficient. However, if it was not a good idea and you wanted to do it anyway, I would not want you to have selective memory later on when the FOS hears your complaint that all your money has gone and you did not understand the transfer implications.

    All we need as advisers is the reassurance that the rules will protect us if we allow all transfers, which is good business sense.

  6. Michael Winfield 15th May 2015 at 12:23 am

    Please go back to the original format.

  7. This is all about the FOS. It doesn’t matter what is said in the “darkened corners” of Canary Wharf; it is the FOS that will ultimately decide who is liable in a complaint scenario and the FCA cannot/will not do anything about that. The question for us all is probably; do I trust the survival of my business to the FOS???

  8. I get a very distinct feeling, that some-one in government has connected their boot to some-ones arse at the FCA ! first we have RP setting out guidelines to document insistent clients and now this ! reading between the lines, George wants his tax up front the FCA rules are getting in the way of this because the industry (en-mass) wont transact this kind of business, (maybe this is the way forward ?)
    As for FOS, the FCA and Treasury could give a toss about any future sh1t storm that their policies create for the future, as we are there to cover the bill !

  9. Be afraid-You will either pick up the tab as the FOS will rule against you in all cases OR you will pick up the tab because some wide boy has transacted all the insistent cases that you didn’t want to in trying to protect yourself. This could bring down the entire advisory sector. The FOS needs to sort this and until it does we should as a whole refuse to get involved……The nasty one is where the monies are transferred to non-reg investments and we will still all pick up the tab.

  10. David Bennett 21st May 2015 at 5:51 pm

    Unless the talks include FOS, then this seems pointless.

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