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PFS chief: Clients should take responsibility if they disregard advice

PFS chief executive Keith Richards

As part of its professional evolution, the advice sector is establishing greater trust and putting the misselling scandals of the past behind it. But it is time we reminded ourselves of previous lessons learned.

The Government’s pension freedom reforms have been broadly welcomed but there is a risk that, unless properly scrutinised, the resulting sharp uptake in transfer activity could lead to the next misselling scandal.

The FCA has already raised the flag, reminding advisers in January of what it expects when transfers are facilitated. It has made it clear it is monitoring transfer activity and there is well-placed speculation it will implement a thematic review later this year.

The profession is concerned that a minority may be treating pension freedoms as a golden commercial opportunity, which is why we have issued a good practice guide to assist advisers and remind them of their responsibilities to clients.

If the Government and the FCA expect advisers to facilitate transfers contrary to their professional advice, additional safeguards should be put in place to protect them and their clients by providing certainty of future treatment.

The spirit of pension freedoms is to give choice and responsibility to the consumer. In the interests of positive consumer outcomes, it is time for this responsibility to be extended to cases where they disregard advice.

Consumers that seek advice must be able to rely on the integrity and duty of a professional.

Commercially-minded advisers who follow unsuitable or formulaic processes and fail to adhere to their ethical responsibilities risk tarnishing the entire profession. We have to endure we avoid history repeating itself.

Keith Richards is chief executive of the Personal Finance Society


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There are 6 comments at the moment, we would love to hear your opinion too.

  1. Here here !!!

  2. Duncan Carter 9th May 2017 at 3:22 pm

    This is a good, sensible article at many levels because it highlights how governmental and regulatory thinking is not conjoined. I wonder how as a profession we can effectively lobby to bring this to a logical conclusion?

    Incidentally despite RDR, there are still firms who call themselves advisers out there but will be filling their boots in this area and looking to protect themselves by hiding behind the new ‘insistent client’ rules which are really an oxymoron!

    So patient says to Doctor, I want you to chop my arm off because I need to lose weight. Doctor knows it’s wrong but sends the guy a letter saying that he’s only doing it because the patient insisted!

    I know there will be some occasions when it will be the right thing to do (the transfer not the amputation) but we just can’t wait for the next thematic review and subsequent hike in PII costs!

  3. Some people come up with some amazing comparisons, but Duncan’s must really take the prize for the most ludicrous? Chopping an arm off compared to transferring a pension, really?

  4. So tired of hearing about this. I someone comes to an adviser looking for advice about a possible transfer it should be a really easy outcome. The client pays for and gets the appropriate advice. If the advice is not to transfer that should be the end of it. If the client then decides to transfer they should do so, themselves. Any provider who takes the transfer should get a copy of the recommendation report to keep on the client file. Said provider should be absolved of any responsibility by pre-warning the client they have been professionally advised not to do this and if they still wish to proceed then on the client’s head be it. It is impossible to protect all of the people all of the time. The FCA does not have the balls to stand up and publicly say to someone “Sorry matie, your adviser told you not to do this. He/she listed the various reasons why the recommendation was to not transfer but you went against his/her advice. You thought you knew better than the professional adviser and now realise that you don’t. Next time you pay for advice you should heed it now go away and stop trying to get someone else blamed for your stupidity”. Unfortunately the FCA cannot and will not allow client responsibility to enter this equation. They always want advisers at hand to blame when complaints come in.

  5. Hold on here just one cotton pickin minute……

    I am a regulated adviser and as such, if i give some-one regulated advice (on pension freedoms in this case), then subsequently, said client wants to go against the recommendations I have given…. there is no way I am going to go ahead and do it for them !

    I have said many times before on this subject, and there is no such thing as an “insistent” client there is always a “reason why” a client wants to do something and in that I take full responsibility (it comes with the territory) I would argue the percentage of clients that would want to go against regulated advice would be almost non-existent ?
    Just because a client wants to cash in as much of his pension as possible to sail around the world wasting it on cheap scotch, big cigars and fatty food is his own choice and certainly not for me to judge, this is a fact (hard or soft in makes not difference) and as such, a objective, aim or goal, what would be wrong is me judging such, a reckless use of THEIR money

    The major problem that needs to be focused on, is “non advice” and how this is being used to skirt around the issue.

  6. Duncan Carter 9th May 2017 at 8:11 pm

    Simon Hall – DH’s point is the point!

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