Advisers, worried that pension transfers for ‘insistent’ clients may impact their insurance or lead to complaints, have had their fears recognised by The Financial Conduct Authority (FCA). The regulator has asked IFAs to recommend how it can amend its rules to enable these transactions while protecting consumers.
Insistent clients are those who choose to act against their adviser’s recommendation. The FCA rulebook make no reference to insistent clients, but the regulator recognised the issue when it published an adviser factsheet earlier this year offering guidance for advisers.
The FCA says it is aware that advisers are still uneasy about dealing with insistent clients, with particular concern regarding complaints to the Financial Ombudsman and professional indemnity insurance. Now it has gone one step further. Its latest consultation asks advisers how regulation could be amended. “The feedback we have received from firms since the introduction of the pension freedoms suggests that the potential for an increase in the number of insistent clients is substantial in relation to pension transfer advice. We would be keen to hear further from advisers on how they consider that our rules could be amended to provide more certainty,” said the regulator.
“Pension transfers are seen as high risk by professional indemnity insurers on the back of significant historical issues and insurance payments,” said James Burgoyne, Director – Claims & Technical Brunel Professional Risks. “Advisers are right to worry about how this business may impact their ability to secure competitive insurance. This is particularly true if they transfer defined benefit pensions to defined contribution schemes for insistent clients. It is good news that the FCA has decide to consult on rule changes. This could provide far more clarity to advisers and their insurers”