“Insistent Client” Pension Transfers

Of the 72,904 people recommended to stay in their DB pension, 9,534 (13%) transferred out anyway. In the industry, these are referred to as “insistent clients” – people who seek advice and then choose to ignore it and follow their own path.

Some advisers offer an “insistent client service”, where they claim to document clearly their advice and why this was suitable, followed by details of what the client is insisting on and confirming that any subsequent actions the investor takes are against their advice. The company will take on the pension transfer work, even though it is against their advice.

But TLW Solicitors has seen cases where clients were asked to fill in application forms (for the pension transfer) before any suitability letters were prepared. In other words, the client had not received a detailed written report on why the financial adviser thought the transfer was unsuitable before they signed the paperwork to start the transfer process.

Whilst there is no rule to prevent advisers from transacting business against their advice if the client insists, FOS has directed that the adviser has a duty of care to refuse this type of pension transfer work. Further, they should reiterate their advice that a pension transfer is unsuitable because of, for example, the size of the investment, the charges likely to be incurred or the nature of the investment compared to the client’s attitude to risk.

Head of the financial mis-selling team at TLW Solicitors, Peter McKenna, has dealt with many pension transfer cases:

“An Independent Financial Adviser (IFA) can claim a client is “insistent” when the IFA offers advice that a transfer should not go ahead, but the client insists that it does.  If an IFA records that the client was genuinely “insistent”, there is a documented FCA process for advisers to follow.  However, some of our clients have simply been asked sign a form, saying that they are an insistent client, as part of a standard pack.

We have also come across a situation where every client was classed by a particular  IFA as an “insistent” client and it was commented upon by the investigating Financial Ombudsman Service (FOS) that they had seen several similar claims which all claimed to be “insistent clients” in the paperwork.  It soon became clear that the process of the transfer was flawed – by treating everyone as “insistent” and it was only when numerous similar examples could be reviewed side by side that this systemic process was exposed.”