HELPING OR HANDLING? WHEN SUPPORT BECOMES REGULATED ACTIVITY

It starts innocently enough. A new client hands over a carrier bag full of dusty paperwork and says something like “my previous adviser sorted all this…I think.”

You flick through the files, begin piecing the story together and gradually raise an eyebrow. The client notices. They lean in, and then the questions land with all the inevitability of grey clouds on a bank holiday weekend. “Should I complain? What do you think?”

This is a moment advisers know all too well. Supporting the client feels natural, but there is the faint hum of regulatory risk in the background. Complaints handling on behalf of consumers is a regulated activity in its own right, and the two worlds sit uncomfortably close together.

The thin grey line

There is a fine balance here and most advisers encounter it more often than they’d like. One moment you’re explaining historical charges, the next you are somehow drafting a letter of complaint.

This isn’t the only line you can inadvertently cross. Sometimes the pressure doesn’t come from the client at all. There can be a temptation to position your own proposition by pointing out the shortcomings of your predecessor. After all, nothing bonds you with a new client like a bit of professional outrage…except when it backfires.

Why do advisers fall foul of regulated activity?

Even before Consumer Duty came along, firms have tried to guide clients through product switching by explaining historical arrangements. The hope is, they can recommend something that puts the client in a better position.

The difficulty comes when support quietly evolves into something more pointed. Before you know it, you’ve wandered into a regulated activity.

This happens because the distinction between explaining and encouraging is subtle. You might think you are simply helping a client make sense of what happened previously, but if you actually nudge them towards a complaint, the regulatory boundary starts to loom large.

The moment support shifts into representation, the line has been crossed. It is entirely acceptable to explain factual matters, highlight technical issues, and help the client understand how a product was set up. However, drafting a complaint letter, or explaining the argument they should make is not. The same goes for contacting the previous adviser or provider on their behalf and even advising on the likelihood of redress. Any of these actions move you into territory that you need explicit permissions to occupy.

The FCA acknowledges the realities advisers face, but it isn’t an organisation that accepts ‘good intentions’ as a defence. Intent may explain how a breach occurred, but it doesn’t reduce the severity of crossing the line.

Supporting not steering

In practise, the tension is simple. Clients want guidance, and you want to be helpful. When you spot poor historical advice, it seems almost unnatural not to sort it out.

But the moment you start shaping a client’s complaint, recommending pathways, or making contact with a previous adviser, you’ve moved from describing the landscape to steering the ship.

This is claims management, pure and simple. Unless your firm holds explicit permissions for that, it is outside your regulatory remit. This is why clear, transparent internal boundaries are essential. Advisers need to know not only how to support clients, but also where they must stop.

What about criticising others? Sometimes the issue isn’t that the previous advice was poor. It’s that you think highlighting its weaknesses reinforces your own proposition. This happens more often than anyone cares to admit.

If there has been no actual harm or detriment done to a client, and the other adviser’s approach is just different to yours, even if you disagree with it, there is no real need to complain.

This approach carries risks that go far beyond client confusion. For one, criticising another adviser erodes trust in the entire profession. The industry is working hard to demonstrate value, integrity, and long-term consistency. If every time a client moves to a new firm, they receive a list of the previous adviser’s flaws, their confidence doesn’t just drop in that individual, but in all of us.

Remember the old adage, what goes around comes around? Reputational karma tends to travel in circles. If a firm tells clients they should be suspicious of their last adviser, the next one may return the favour.

What does responsible support look like?

Don’t avoid awkward conversations, engage with them properly.

Firms that clearly define the difference between explanation and representation can support clients without fear of crossing regulatory lines.

Stick to factual explanations of what’s happened, outline the technical context in plain language and help the client understand their options, without nudging them towards any particular outcome.

Clients will continue to move between firms, and you will likely still uncover past decisions that range from perfectly reasonable to hard to defend. That’s normal. What matters is how you navigate these discoveries without drifting into regulated activity or creating unnecessary conflict within the industry.

If you’re unsure where the boundaries lie, or if you would like someone to give you an impartial view of your replacement business processes, don’t hesitate to contact us on (0161) 521 8641 or email: info@b-compliant.co.uk