The Personal Finance Society (PFS) has written to the government and the FCA, urging them to address the issue of ‘insistent clients’ acting against professional advice – or run the risk of creating a potential access to advice shortage and a future mis-selling scandal.
Citing the positive progress made since the 2012 retail distribution review, chief executive Keith Richards said: “The advice profession has worked hard to jettison its sometimes tarnished past reputation and is set to play a wider role in supporting the public with the more complex challenges of retirement planning.
“The government are sensibly seeking to mitigate the risk of poor outcomes by ensuring that people take impartial professional advice when wishing to transfer out of a defined benefit (DB) pension scheme or effect an annuity resale.
“However, where the advice is not to transfer, the government have confirmed that people will still be at liberty to ignore it. This places advisers in a compromised position, as many will not be prepared to facilitate an insistent client transaction which goes against their professional advice. Those who do, will be party to arranging an unsuitable solution and might be deemed liable in the event of a complaint.”
Richards warns that there is already increased demand for this type of facilitation as people exercise the option to access their cash, without fully understanding the danger it poses for their future financial well-being.
He wants it made clear that ignoring professional advice must exclude any form of future redress against the adviser or the FSCS.
“If the government want advisers to help implement greater consumer choice, we are calling for an urgent change of policy in recognition of the risks this represents to both the public and the future reputation of the advice profession,” he stated.
“Caveat emptor must become a recognised component of the insistent client process. Until that happens, advisers should not get involved in unsuitable facilitation without being protected. It benefits neither them, the profession, nor the public we are here to serve.”
