Find out more about what we consider to be good and poor practice when advising insistent clients
Advising an insistent client
Information gathering was bespoke for the client, and not restricted by the limitations of a narrow process or template approach. Omissions, inconsistencies and anomalies were followed up, resolved and documented to create a full record of the facts on which the personal recommendation was based.
Although, from the fact find, it seemed likely that the client’s liabilities were a key element in their opting to access the cash against advice, it appears the client was not given any information about how to get debt counselling or loan restructuring advice.
Rules when advising insistent clients
If the client said they wanted to access cash, the adviser explored their real need for the cash. If the client was driven by the need to repay debt, the adviser helped them make an appointment with Citizens Advice for support regarding their debts.
The advice related only to the suitability of the transfer itself. In other words, the adviser did not consider the client’s wider financial circumstances; and transfers had to be to a default DC arrangement without considering existing pension arrangements.
The adviser gave a personal recommendation in clear and unambiguous terms regarding both the advice on whether or not to transfer and, if the client chose to transfer, the receiving product and the funds into which the client was advised to invest.
The adviser discussed the client's reasons and the risks of not accepting the personal recommendation. The adviser documented the reasons, the discussion and its outcome in a separate document to the original personal recommendation.
Robust warnings were given and documented.
Template paragraphs were used in the personal recommendation which did not relate to the client’s specific circumstances.
Communications with the client did not contain sufficiently strong warnings about the risks of transferring against professional advice.
The language used to describe the recommendation left the client to decide between various options. For example, the suitability report recommended that the client stay in the scheme but that the client should transfer if any other objectives were more important to them than maximising their income at retirement.
What to keep on file
Contemporaneous records of discussions with clients were made, kept and used to check the client’s understanding of the risks and implications of the recommendation.
The file did not indicate why an insistent client decided to act against advice not to transfer. There was no documented process to show how the client was treated as an insistent client.
The rationale for the insistence was captured in the client’s own words.