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SimplyBiz warns advisers on ‘insistent’ pension transfers

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.


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There are 40 comments at the moment, we would love to hear your opinion too.

  1. I’m sure that many advisers will find it difficult to turn clients away as suggested here, but the Simply Biz advice is absolutely correct. The new pension freedoms will inevitably lead to situations where a client’s best interests will conflict with their desire to do something else with their money. If advisers assist with the transaction of business which is against the client’s best interests and things go wrong, the adviser will be in the firing line. Hopefully the consumer groups will see the logic of this stance and support it.

  2. I am not convinced this is helpful. we need to be empowering advisors to help consumers achieve their aims, not frightening them into backing away. I don’t believe there will be such a word as retirement in 10 years time and people will be using their life savings to do many things- income maybe, but starting a business, retraining for a different job, working part-time etc etc. The government gave them opportunity and empowerment, so who are we to not support them getting advice, understanding the risks etc, seeing the alternatives. There may be many alternatives that are suitable- some more suitable than others, some may deliver their objectives and others may not- but if their objective is NOT to use it to deliver an income in retirement- why are we saying that isn’t ok?

  3. I agree. On the face of it there is too much confusion about how these new rules are going to be acted upon. I would guess it will usually not be in the interests for anyone at aged 55 to take their pension provision just to spend it. I believe clients already think they just have to turn up and demand the release of their (own) money and we the advisers simply have to facilitate the transfer. This is fraught with danger and as advisers 99x out of a hundred I guess the simple answer is not to get involved.

    Of course advisers could simply decide as the Government has said the pension holder should be able to do as they want they will advise against this, document this clearly and still proceed on an insistent client basis. My worry is the FOS et al will simply disregard the clients ‘insistence’ down the line and throw the whole onus for the advice back on to the adviser.

    There needs to be clear guidance how this is going to work in reality and until there is I for one am keeping well out of the way. Pension freedom? – for who?

  4. As Jane Hodges implies, we are likely to be caught between a rock and a hard place with the FOS under the impression they have infinite right to judge too.

  5. Marvin the paranoid android 23rd March 2015 at 11:12 am

    We are employed/contracted/retained by clients to give ADVICE therefore it is our advice which matters.

    If we, using our professional judgement and knowledge of the clients circumstances, conclude that the transaction is not in their best interests, we should tell them so, be paid for that advice and that should be the end of it… In a perfect world of course….

    Regrettably, most adviser charges are still facilitated via the sale of a product..therefore the temptation of many would be to carry out the transaction albeit behind a veil of “client insistence”

    I applaud Simply Biz for this and as a Compliance Director I will be echoing this stance in our proposition for post April retirement advice.

  6. Nick Pilkington 23rd March 2015 at 11:17 am

    Totally agree with Simply Biz. Everyone in the Industry knows that this is a disaster in the making. Even then FCA are aware of this but as usual they will not lay down any concrete rules but will open the claims process a few years down the line.

  7. 100% agree.

    The FOS situation/stance is the big concern and I am sure that for many outsiders this guidance seems bizarre and unhelpful, but try walking a mile in our shoes and you will understand exactly where Simply Biz are coming from!

  8. Marvin the paranoid android | 23 March 2015 11:12 am

    Regrettably, most adviser charges are still facilitated via the sale of a product..therefore the temptation of many would be to carry out the transaction albeit behind a veil of “client insistence”

    This is why the industry is in the state it is….. When a client is told by the government they have a right to do with their pension as they see fit and are told by an adviser it isn’t good advice to use their pension fund before retirement and they insist they want to access the money this isn’t a veil of ‘client insistence’ as you put it. This is a client insisting they know its not good advice, but they still want to do this.
    Where is it right to give the client the opportunity to use their pension funds as stated by the Chancellor but for us as advisers to be so frightened by the regulator etc. we won’t help them achieve what they want?
    As previously stated this is a shambles. There needs to be clear guidelines about what we can and can’t do with this new set of rules because at the moment its as clear as mud.

  9. If the adviser community stands together then this could be the issue that will destroy our current backward, retrospective regulation regime.

    All it needs is for the financial services industry to stand together and state that we will not deal with any pension flexibility work until the matter of liability is clearly and legally defined. Let’s make pensions flexibility the first product where client’s take back responsibility for their decisions.

    If we don’t take a stand, this has the potential to destroy us all.

    Personally I am not going to do any of this work for new clients until I know where the liabilities fall.

  10. What we have to remember is that the money does not belong to the adviser, it belongs to the client. When I go to the bank to draw money out I don’t expect a cashier to interrogate me about what I’m going to spend my own money on. If clients want to encash an investment it’s up to them. We can point out the disadvantages and pitfalls and that’s it.

  11. Marvin the paranoid android 23rd March 2015 at 12:02 pm

    This is the problem.. Advisers are there to ADVISE..we “sell” advice ( I know..Sell is a dirty word…) but advice is the commodity we supply and upon which we are judged under the system… ( I’m not opening any debates about the validity or otherwise of the system..but we are in it and we have to run our businesses accordingly..)

    as a BUSINESSMAN.. I want to avoid situations which could damage my business..and I see this arena as a risk…

    transacting something which is not in the interests of the client and against our own advice doesn’t strike me as a sensible way to protect my business.

    what you do with your business is your concern….

  12. The solution is very simple. Direct payment from a client to investigate the potential transfer, prior to commencing work. If the advice is not to transfer, the client has paid you for the work you have done and should be grateful for the advice given. If they subsequently still wish to transfer, then you should stick to your recommendation and inform the client that you are not wiling to act for them to do something which, in your professional judgement is not in their interest and decline to act for them in the matter. The one thing you can guarantee is that complaints will come flooding in to FOS and as sure as night follows day they will side with the client. FSCS bills will rocket as the size of compensation claims are likely to put a lot of firms out of business. As things stand it is bad news all round until the FCA and FOS consult and agree a directive of who is responsible for liabilities if insistent clients want to go ahead. Problem is that this will not happen as it will mean they cannot go back on their own rules so no specifics will be given. It will close too many doors to possible future complaints going the client’s way.

  13. Neil F Liversidge 23rd March 2015 at 12:17 pm

    I’ve written a column on this topic which should be in the upcoming copy of MM this Friday. Mixed messages from the FCA indeed!

  14. Guidance Guarantee 23rd March 2015 at 12:47 pm

    A good analogy would be if you owned a shop selling guns and a customer came and said I want to buy a gun. If during the course of your conversation with the customer they stated to you that they wanted the gun to shoot themselves with. It would be immoral for you to then profit by selling them the gun when you knew that they were going to harm themselves. The consequences may not be as grave. However, the same principal applies to pension transfers when you know that the outcome is not in the best interests of the client.

  15. There are several product providers who will not accept instructions from clients to process transfers now without adviser input. So the client says, “I want to do this.” The adviser says, ” I can’t let you (in case I get sued later)” and the provider won’t accept the client’s instructions…?

    Hmmm…. Dear Mr Webb….

  16. Whilst accepting that it is not our role as advisers to stand in the way of consumers wishing to access their own money, there are those who will not understand the implications of their actions, and when things go wrong they will be coached to claim ignorance and blame someone else.

    Either we allow a free for all, with the Government ( taxpayer ), stepping in to underwrite the potential damage, or we have the current strict regulatory framework to protect consumers, which is one of the FCA mission statements. something in between does not work, it is loaded against the adviser.

    If you go to a doctor who says do not smoke, eat less and exercise and you ignore the advice, you suffer the consequences with poor health or even death, you accept the consequences of ignoring the professional. The doctor cannot control the situation, and is not liable for the outcome. With pension transfers we can control the decision and protect consumers against themselves, so surely that is not a bad thing. I have stated my position before, anyone who ignores my advice is not a client, so end of story. Get someone else to do your transfer.

  17. It isn’t up to the Regulator or FoS to decide on this. We are advisors and we need to get on and advise. If a custioned wants income to retire on then we know what to recommend- if a customer wants something else then there are now lots of options. We just have to do our job and we should definitely start to charge for the work we do and not the product re recommend and then noone can argue that we did this for the wrong reasons- we do it coz our customers asked for advice on how to best achieve their objectives. But we have to stop thinking that we can question what they are trying to achieve with their money- it is their money and to assume that the standard pension product is the only way forward reduces their options and our job is to do the opposite.

  18. Having sat down and thought about this from my own practice and processes;

    I don’t offer a free consultation, my charges are based on fact finding, research and recommendation, and lastly implementation. “minimum fee being observed”

    Its the implementation bit that concerns me; from a clients perspective they have asked me to do a job, if at the end of that job “their wishes” conflict with my recommendations,

    Do I walk away and give a refund ? (as I have charged them on the process as a whole )
    Do I offer a part refund, on a job half done (the client knowing that I have only done part of the job) and as a client would I pay for something that’s not complete ? No !
    Do I do what I say I would do, and implement their wishes, (with the usual belt and braces that go with it)

    As a rule I have not had many insistent clients, (probably 2 in the past 7 years) who have totally gone against my recommendation, but I have still processed the investment !
    So looking forward is this going to be a massive problem ? I am not convinced it will be ? its just the odd occasion it does raise its head, its common sense that will dictate outcome for me !!

  19. Ok, so under what circumstances will an adviser state to their client ‘This action is not in your best interests’. Who are we, but an amateur bunch of wannabees who think they know it all! How well trained are we to make that decision? Do we have a crystal ball? We all better start training for an advanced Pension qualification now as, from what I read, the standards of advice is awfully low, particularly within the larger Networks.
    Give me three good examples of a man aged 60 now with a pot of, say £40k where you would advise him not to continue with his proposed actions. Remember if the guy wanted to take the lot and pay a shedload of tax, he would never see you in the first place as he can just go direct. If it were a transfer scam he would not see you unless he was suspicious, in which case he would heed your advice. If not, you never had any business in the first place. You can’t count illness as a load of people recover from very serious conditions, especially Cancer. I bow to the forum’s knowledge.

  20. @Jane Hodges
    Erm… as things stand it is up to the regulator and FoS to decide on this and they will. The main problem is that their decisions are a little better than murky and in the FOS’s case, haven’t been made yet.

    As an adviser you will need to decide what your personal risk appetite is in these circumstances. You can take a principled stand and accede to insistent client requests but you (and other advisers picking up your subsequent FSCS tab) may pay a high price later.

    As alluded to by some commentators this could be a gift to advisers and an opportunity to be heard. If all advisers refused insistent clients it would make the headlines – an I wonder what the media spin would be on this, positive or negative?

  21. Neil F Liversidge 23rd March 2015 at 2:14 pm

    I’ve just ten minutes ago declined to take on a client who at age 50 wanted to move all his DB scheme to a DC scheme so he could get out the money to pay for a new knee. We could agonise forever over the ethics of this but you know and I know that there’s a good chance it’ll turn intro a complaint 10 years down the line when he’s a lot poorer and has forgotten how sore his old knee was, and when that happens some nitwit at the FOS will say it was our fault. So, **** that for a game of marbles, we’ll stick to being boringly profitable and minimise the chance of a complaint thank you very much. Maybe Steve Webb can set up an IFA firm with Clegg after they lose their seats and they can have the liability of all the DB transfers.

  22. @Neil

    Sorry just had to have a little chuckle to myself !

    Maybe we have a new “buzz” word / phrase “Vanilla advice”

    Long gone have the days, of tutti fruitti, raspberry ripple, good ole “99” with nuts and a flake ?

  23. There is an advantage in not having both AF3 and pension transfer permissions- we can’t do it even IF the client insists 🙂 I was studying AF3 last year, but even if I had passed I was in two minds about applying for permissions as once you have BOTH and a client approaches you for advice at all, how do you advise on one part of their pensions and not the other unless it is the regulator who tells us we are not allowed to (as in my case).
    I think there is a good argument for separating the advice on occupational transfers from the relationship adviser.
    @DH – We quote a separate fee for 1. research and advice and 2. Implementation and may be a good way for those with pension tf permissions to ensure they separate the 2 issues, i.e advice and implementation as it will then be for the provider and consumer to decide whether to implement contrary to advice if we step back from that bit.

  24. Hopefully not a ” knee jerk ” reaction then Neil!

    Normal advice would be borrow the money for the operation, from whatever source, you can always pay it back from TFC later. That is what we are up against, short term decisions that have long term implications.

    In response to those commentators who feel that we should let the clients do what they like with their own money, as Approved Pension Transfer Specialists our hands are tied by the rules that bind us. The alternative is a two tier system, advised or not advised, which the FCA will not go for as unscrupulous advisers will hide behind the non advised label to avoid liability. The system works well enough, and whilst we appear to be in direct conflict with policy makers, we do not make the rules.

    What it comes down to is that their are consumers we cannot trust, and advisers we cannot trust, with those following the rules underwriting those who do not.

  25. @Geoff S – As I say, that is one of the advantages of NOT having transfer permissions, we look at what a client has, we explain the costs involved of getting advice on a transfer, they decide whether they want to pay for that advice or not. If they do, we pass on to someone with necessary permissions if not, we don’t. The vast majority don’t want to pay or the occupational scheme is too small compared to the advice cost, even if they do, most are not advised to be transferred and the advantage for us, is we CANT transfer it if they are insistent clients, so no risk to use, we stay out of the loop.
    I do see however that if the person wants to shoot themselves in their foot for some strange reason., whilst I will not hand them the gun Or go anywhere near it, nor benefit from their stupidity), they should be able to contact pensionwise and tell them they are insistent and there should be a mechanism for them to arrange that, perhaps with a panel using stakeholder style arrangements because as others say, it is their money afterall, we are NOT the trustees (after all in some countries euthanasia is allowed and in this country attempted suicide is no longer a capital offence!)

  26. @Neil

    I had a similar conversation with a ‘potential’ client last week. Situation is that he is in a very good DB scheme at the moment. His concern is that upon his retirement the protection for his kids (what they’d get if he died) drops to nothing as their is no provision for them once the pension is in payment. He is divorced so no spouses pension.

    He is a perfectly healthy individual with about 3 years left until retirement. Try as i may i could not get him to consider the much more likely event that he is around for another 20+ years and therefore should always consider the income he’ll get from the scheme as the most important bit. He has suggested a transfer to a DC scheme. I have told him that he wont find an adviser that will agree with him. Sometimes we have to save people from themselves.

  27. @Phil

    Yes have considered this; however you can put clients in two camps, the ones that “don’t” know they want to do something, and the ones who “do” know they want to do something.

    The first are not going to be insistent, the second are more likely, therefore with them knowing they want to do something, and you turn around and stop at recommendation stage, is like building them a house and refusing to put the windows in because there not the windows you advised they have !

    On saying all that, for me personally I don’t think it will be a big issue, as I don’t come across many insistent clients, but I think there will be many that will HL ?

  28. @Nick Wardle – you haven’t mentioned the age of your client. Is he 55 or more? Because if he is, it may well be in his interests to get a quotation for a cash equivalent.

  29. Neil F Liversidge 23rd March 2015 at 5:30 pm

    About an hour ago I had the second one in a single afternoon. This one didn’t even have a bad knee, he just wanted “all my money out now”. I thought for a minute that somebody on here was mystery shopping me! Oh well, let the silly ******* cash in and pay a big slug of tax, at least the country might get a few extra hospitals out of their future poverty.

  30. @Nick A simple life policy funded by the guaranteed income from the DB scheme keeps everybody happy in this case, and probably a good solution for low risk clients who want a secure income and leave something to their heirs.

  31. @Marvin……”what you do with your business is your concern….”

    Normally I’d agree with you in princple……..but sadly nowadays what someone does with their own business has a horrible habit of turning into all our concerns when the compo bills start getting dished out.

    Therein lies another part of the problem…..

  32. @Ken – He has already received a CETV figure. Would any adviser agree that transfer from a DB scheme to DC scheme for a healthy 60 year old is the correct course of action? Surely longevity is the main concern not, as he put it, getting hit by a bus the day after retirement.

    @Geoff – Very true, his concern was his children losing out if he died in the early years of receiving his pension, before what he referred to as the ‘break even point’. The time when he’d had as much in income as the death payment or CETV was worth. Sometimes I feel that people want their cake and to eat it. How many times have we come across clients that want maximum income but still want to leave a lump sum to their families?

    My “potential” client is 3 years away from retirement and (quite rightly) wouldn’t consider leaving his very good pension scheme before then. In 3 years time we may very well be looking at a very different retirement market with very different potential solutions. That is another part of the problem with pensions but we’ll leave that argument for another day.

  33. I 100% agree with Simply Biz on this, but what happen for our own cases.
    But I have hit a brick wall with Cofunds Pension Account (Suffolk Life) who are my pension providers for self and carrying out my own DB transfer, and being G60 qualified and they have taken since the 8th March to decide to say no to doing my own transfer. Even though its at retirement case, as taking small income from the plan. Not much time left for me to get someone else, and why do I have to!!!!, its not about a fee, but another registered with FCA pension transfer specialist is not going to do my case before end of tax year. My DB scheme is only just got to 100% funding and the transfer value increased from £39,000 2013 to £180,000 and its not going to be the case after 6th April as the flood gates open and other members do the same.Critical yield on TVAS reads 1.1% still I cant do my own case. – So I am going to have to register with FCA to just do my case, but this needs to monitored. I am just so annoyed and the time I have wasted to get to this case. In case some are wondering why I left it so late, well I have been asking for CETV in Dec every year, and just got the figures dated 5/3/2015.
    Where should IFAs with qualifications go!!!! with their own cases

  34. Steve Webb in today’s FT: “And if they are insistent, what does that mean? It means they’ve had it explained to them. But if they have a different set of priorities, is that wrong?”.

  35. SimplyBiz is spot on. The client does not know how long he (or she) will live, or what the rate of inflation will be, or what the return on investments will be, or what the tax situation will be. All an adviser can do is explain the dilemma. If the adviser is always then responsible for what the client does, we are all stuffed. Client A takes the annuity and drops dead a month later. The relatives sue. Client B takes the money and lives to 90, by which time he is starving to death, so he sues.

    No adviser can be confident of a ‘right answer’ because there isn’t one. The client has to make the call, with all the risks and uncertainties laid out before him. We have reached the point where the regulatory definition of ‘advice’ which was always daft is now poisonous.

    This mess could wipe out half the industry.


  36. Having seen the number of posts here, it is clear that this is a subject that raises the blood pressure.

    This issue which is backed by little regulatory prescription, I think the FCA could do worse things than writing and publishing some guidance on a recognised insistent client process, although I don’t think this is on their list of things to do…………….

  37. Marvin the paranoid android 30th March 2015 at 10:05 am

    I accept the principal that is “their” money and I am in no way saying we can or should PREVENT them from accessing it, I do however believe that we should not be seen to facilitate this activity where it contradicts our professional advice. They sought and received our advice, if they dont like it they can go elsewhere or deal with it themselves wherever possible…. We are running businesses at the end of the day and we manage our own risks therein.

  38. Since the adviser does not know how long the client will live, or what the rate of Inflation will be, or what the rate of return on investment will be, or what taxes and benefits will be, he or she is barmy if he or she believes there is a ‘right answer’.

    There just isn’t. There are plenty of known unknowns, to say nothing of the unknown unknowns. The client has to make the call. Period.

  39. @Graeme – Whilst the consumer does make the call, there is an element of the adviser has the choice whether to be involved in a stupid decision or not. As an example, I had a group scheme member about 18 months ago, so pre pension freedoms. He was 58 1/2 and had a pot under 18k. As a GPP member, he was NOT a client of mine, I had NO contractual relationship to him at all so I explained that if he waited a year and a bit (i.e. until age 60) he could exercise the option of taking his whole pension fund as a lump sum (subject to tax on the excess over the PCLS). He was adamant he needed the money NOW as he had no way to access the funds he needed to replace his boiler other than from the PCLS and had his grandchildren living with him (he had custody as his child was delinquent). As his employer’s adviser and NOT his, what do we do? Decline to speak to the GPP provider and order the retirement pack he has requested for an in house annuity and PCLS or not?
    I had a call from him yesterday asking whether with the pension freedoms he can now access the money from his annuity!!!! Will this now be a complaint now I have reminded him he can’t as he bought an annuity as he didn’t want to wait until age 60 and exercise the triviality rule?

  40. @ Graeme, I have developed an excel calculator that shows what happens after any number of years given any inflation pension increases given any investment growth rates given spouse benefits etc – to compare lump sum + pension with a cash equivalent retirement option (CERO).

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