Dealing with insistent clients

Liability

However, PI is a big concern for some in the adviser community. “I doubt advisers have concerns about helping clients even if the client chooses to disagree with the advice being given,” says Benjamin Sear of Martin-Redman Partners in Suffolk. But the work could be uninsurable, and although PI is a concern, so too is reputational damage from upheld complaints by the ombudsman.

The implications for PI are most significant for advisers since insurers reserve the right to withdraw cover for advisers dealing with insistent client at renewal.

But according to Mr Solomons there are two things to think about. First, it is the client’s money so they can do what they like with it. Then there is the matter of how damaging it would be for the adviser’s PI policy. There is increasing anecdotal evidence of PI insurers threatening to withdraw cover for advisers dealing with clients wanting to trade in a DB to a DC scheme.

“I talk to technical support and my PI insurers,” Mr Solomons says. “At that point I either do it as execution-only with a strongly worded letter saying I think this is inadvisable and set out why and get them to sign that they have read and understood it. I also record all phone calls. Or I tell them, ‘Sorry, I am not prepared to action what you want because it is not in your best interests’. Each case has to be considered on its merits, or lack of them, and the amounts of money involved.”

While many claim that the FCA is not doing enough to help advisers on this issue, the regulator clearly defines the practice of good advice. Mr Percival has also said at various events that if advisers follow the three-step approach to giving advice, there will not be a problem with insistent clients. The latest FCA consultation paper asks for recommendations from advisers on how to deal with this issue. It is now up to advisers to contribute.