Looking back over 2015, there can be little dispute that the major event in financial services was the surprise introduction of ‘pension freedoms’. These freedoms though came with their own problems and the FCA was charged with putting in place a framework to govern the application of the reforms. One area of concern was the reluctance of many providers to put much effort into allowing consumers access to these freedoms. You can see their point of view even if you cannot applaud their morals. A bigger issue quickly developed though, which was that of the ‘insistent client’. The prospect of a large amount of cash today has led many investors to disregard the advantages of staying with their schemes, particularly in relation to defined benefit arrangements. Therefore the regulator decreed that anyone with guaranteed benefits of more than £30,000 had to take independent advice. A bit of an anomaly this. The government said that the public should be trusted to behave responsibly with what is, after all, their money. The regulator has said they cannot.

The Cost of Over Regulation

So what about when the client says ‘I hear your advice but I am disregarding it and I insist that I have my money now.’ All too conscious of retrospective regulation, advisers have been concerned about future liabilities should they process a transfer despite advice not to do so. The FCA issued guidance on how to deal with insistent clients, which was a damp squib. It was no more than what any half decent advisor was doing already. They did not issue any sort of guarantee that advisers who followed a straight forward and prescribed format would be protected against action in the future by a client for whom things had not turned out as hoped. Therefore, many advisers are refusing to action requests by ‘insistent clients’ and who can blame them. Probably a vain hope, but would it not be nice if the next head of the FCA was chosen for common sense rather than qualifications and if someone in the organisation looked up ‘caveat emptor’ in the dictionary.


The above is the lead article in our monthly News Notes. Please click here for information regarding these notes.