Dealing with pension scheme members who are insistent clients

The following Pensions practice note provides comprehensive and up to date legal information covering:

  • Dealing with pension scheme members who are insistent clients
  • What is an insistent client?
  • How should DB trustees deal with insistent clients?
  • How do FCA-regulated pension providers deal with insistent clients?
  • How should advisers deal with insistent clients?
  • FCA factsheet on insistent clients
  • Good and bad practice
  • Guidance inserted in
  • of the FCA Handbook on 3 January 2018

What is an insistent client?

The term ‘insistent client’ is commonly used to describe an individual who has received advice (ie a personal recommendation) and chooses to do something different than what was recommended.

For a while, there had been no settled definition of ‘insistent clients’, thereby creating a risk that the term could be used inconsistently.

On 3 January 2018, through the Conduct of Business Sourcebook (Insistent Clients) Instrument 2017, FCA 2017/66, the Financial Conduct Authority (FCA) inserted a definition of ‘insistent client’ in COBS 9.5A.2. Under this definition, an insistent client is a client who:

  1. receives a personal recommendation from a FCA-regulated firm

  2. decides to enter into a transaction which is different from that recommended by the firm in the personal recommendation, and

  3. wishes the firm to facilitate that transaction

The FCA’s definition therefore focuses on insistent client from the perspective of the adviser who is asked to facilitate the very transaction they have advised against.

This area has become particularly relevant to pensions since the pensions freedoms were introduced on 6 April 2015 (for more information on which, see Practice Note: Pension freedoms—an introduction). This is because members and survivors with safeguarded benefits (effectively, defined benefits (DB benefits)) have become attracted to the idea of transferring to a scheme offering flexible benefits (usually a defined contribution (DC) scheme) so as to take advantage of these freedoms.


Popular documents