The FCA has now issued further guidance to advisory firms on how to handle insistent clients – clients who receive advice but choose to take a different course of action. (Note these are not the same as execution only cases, which are instances when the client does not wish to receive any advice at all). Many insistent client cases concern use of the new pension freedoms.
The latest advice comes from the FCA’s technical specialist Rory Percival. He has recommended that firms obtain a written statement from insistent clients, which explains, in their own words, why they chose to disregard their adviser’s recommendation.
He also cautioned against the use of standard disclaimer forms designed by the firm by saying that such forms “can easily just become just another bit of paper to be signed without being properly read.”
The regulator has previously recommended that advisers follow these steps when dealing with insistent clients:
- Give a clear and concise recommendation, ensuring the client understands what is being recommended
- If the client indicates that they wish to take an alternative course of action, clearly explain that this is against the firm’s advice, and make them aware of the risks involved with the route they wish to take
- Clearly document on the client file the fact that the client has chosen to go against the professional advice they received