The factsheet, published today by the Financial Conduct Authority, gives advisers steps to follow to help ensure they are in line with regulatory requirements, particularly in the wake of new pension freedoms introduced in April.
Since the reforms, advisers have expressed concerns about whether they would be held liable if a client chooses to ignore their advice, and in April, the Personal Finance Society urged the UK Government to do more to protect clients who go against advisers’ advice.
The factsheet said there is “no rule preventing advisers from transacting business against their advice if the client insists”. It also said advisers must follow normal advice rules first as there is no rule related specifically to insistent clients.
No pre-conceived idea
The FCA’s three key steps include:
- Providing suitable and clear advice to the individual client which is fair and not misleading
- Being clear to the client that their actions are against the advice
- Making sure the client is fully aware of the risks of the alternative course of action
It added that there might be additional requirements – such as consulting a pension transfer specialist – when advice includes a pension transfer, conversion or opt-out.
The body also said it had no pre-conceived idea about how often insistent clients will occur. “It is unlikely to be common for clients who are seeking advice to disregard that advice,” it said.
“Where clients are required to take advice, for example in relation to defined benefit pensions and other safeguarded benefits, then some may decide to disregard that advice.”
The FCA went on to detail its concerns in relation to the insistent client business, including cases when advice had been a ‘papering exercise’, meaning the adviser had processed the case on an insistent client basis but this was not representative of what had happened in practice.
