The FCA is weighing up further investigation into problems with insistent clients after some in the industry said a factsheet on the subject was “a waste of time and had no regulatory status”.

But the regulator stressed that it was the industry’s responsibility to consider “how it can deliver on customers’ expectations”.

In a report published today the regulator said professionals have pointed out that without a standard definition, the term ‘insistent client’ is used inconsistently.

The FCA published an insistent client factsheet in 2015 but there is currently no Handbook reference.

The report, released today, which summarised advisers’ views on a consultation, stated: “Some thought the insistent client factsheet was helpful; others considered it did not go far enough; some thought it was a waste of time and had no regulatory status.

“A number of respondents commented on the possible inclusion of insistent clients in the handbook: some thought there should be a definition and a process for transacting, possibly including a standard disclaimer template; others considered it would be best if there were no changes to the handbook.

“One respondent considered that changes to regulation may have unintended consequences such as causing new firms to enter the market to service insistentclients which could have the potential to create systemic risk. On the other hand, another respondent considered that regulating to reduce insistent clients might help to reduce the number of consumers caught up in pension scams.”

The FCA concluded on insistent clients: “We expect to undertake more work on pension transfers and will be considering the responses and suggestions in more detail as we look at possible policy options going forward. 
It is our view that the issues raised in relation to client’s bests interests and insistent clients extend beyond pension transfers and to the wider pension 
 landscape. This requires a more holistic view to be taken of any possible regulatory interventions.”

Officials acknowledged that the pension freedoms have “increased apprehensions of advising and transacting in some cases” and that this created a risk those consumers will lose confidence.

The FCA stated: “While we consider whether there is a need for us to undertake more work in this area, we believe there is a responsibility upon the industry itself to consider how it can deliver on customers’ expectations. We do not see any case for moving away from client’s best interests as a starting point for advice.”

The report said: “On pension transfers specifically, some respondents argued a strong case for extending the current methodology for TVA to incorporate other options. When we consider the options, we will put a strong emphasis on having a process, which improves the chances of delivering good outcomes for consumers. As the actual outcomes may not be known for many years, this may mean that the focus needs to be on consumers understanding what they are giving up and the value and uncertainty attached to the alternative options on offer.

“The need for consumer understanding means that communication is a key part of the pension transfer process. We consider that the current TVA comparisons are unlikely to be helping consumers to be making informed decisions; this is because the included information is so overwhelming that it is doubtful if the document is being read.

“We will consider the comments on advice options for enhanced transfer exercises in light of the wider comments in FAMR on advice options and labeling. We will continue to talk to stakeholders over coming months and would welcome further input from interested parties.”

The report added that a number of respondents mentioned PI insurers as a barrier to transacting for insistent clients in their answers to the question but provided little additional information. Respondents said that PI insurers need to reach consensus with FCA and FOS on the process for transacting for insistent clients and it was also suggested that the PI insurance market needs reviewing.

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