At Money Marketing’s Retirement Strategy Summit in June, one of the keynote speakers was Alex Roy from the FCA.
He is a manager in the regulator’s life, pensions and investments division and is responsible for “distribution strategy and competition.” That is one hell of a business card.
The reason I bring him up is that at the event and at the earliest possible opportunity, the conversation turned to the issue of insistent clients.
As you may have guessed, the discussion quickly became very heated as advisers pressed Roy for answers on how they were supposed to protect clients’ interests against such a vague regulatory backdrop.
The FCA’s man told delegates he was not clear what more information advisers wanted. He said: “If people are looking for ways to limit liability I’m afraid that’s not something we can do. That’s set by European law – if you’re worried about the Financial Ombudsman Service, perhaps you can talk to them.”
The regulator has since published guidance on dealing with insistent clients but advisers are less than convinced that this guidance will protect them should misselling claims materialise further down the line.
Money Marketing reports this week that advisers have begun to pass on the cost of the excess on their professional indemnity insurance straight through to clients when advising on defined benefit transfers.
This is a clear indication, if one was needed, that firms are pricing in what is deemed to be high risk advice, and looking to protect themselves as best they can.
It has been suggested in some quarters the insistent clients issue is merely hypothetical and all in advisers’ heads, but the impact on charging structures shows this is all too real.
Nor is this just an adviser problem – for some savers, they face having to choose between the lesser of two evils: paying a premium for advice to transfer on the one hand, or not getting any advice at all on the other. That does not sound like freedom and choice to me.
Natalie Holt is editor of Money Marketing. Follow her on Twitter: @Natalie_Holt_MM