SimplyBiz has warned advisers not to transact requests by “insistent” clients that are against their recommendations post-April.
In a note to advisers on the Government’s pension freedom reforms, seen by Money Marketing, the compliance and support services firm says it is concerned about “mixed messages” from the FCA and the Financial Ombudsman Service on insistent clients.
The note says: “It is the considered opinion and recommendation of SimplyBiz that you do not transact a client’s request that you know not to be in their best interest.
“As a directly authorised adviser, you retain the ability to choose how you implement the guidance that you receive from SimplyBiz but we feel that we must make this point absolutely clear.
“If your client wants you to perform an action which is against the advice you have given, and ultimately not in the client’s best interest, then we strongly recommend that you don’t proceed with executing the solution.”
It continues: “We are concerned about mixed messages from FOS and the FCA, the potential for future claims and the exemptions that may be enforced in the future by professional indemnity insurers. Acting against our advice could be a substantial risk to you and your business.”
SimplyBiz joint managing director Matt Timmins says advisers could still be vulnerable to ombudsman complaints despite following FCA guidance.
He says: “Regardless of the information contained in the suitability letter and a client’s signed statement, the FOS could uphold a claim if it felt the advice wasn’t in the best interests of the client.
“Everyone in the industry knows that pensions freedom is the next potential misselling scandal and we need clear and consistent guidance across the FCA and FOS to protect against this happening and not just punish advisers when it does.”
SimplyBiz says advisers which do decide to transact requests from insistent clients should obtain confirmation in the client’s own writing of their reasons for rejecting the advice and awareness of the risks associated with their course of action. It also recommends an addendum to the suitability report confirming the relevant risks, such as tax and impact on state benefits.
Personal Finance Society chief executive Keith Richards warned last week that advisers who process “insistent” defined benefit to defined contribution transfers post-April risk opening themselves up to ombudsman claims.