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MANAGING INSISTENT CLIENTS
What should you do when a client wants to go against your better judgement?
Thankfully, it doesnât happen too often, but the so-called âinsistent clientâ situation can be a unique challenge for advisers.
In these circumstances, it is crucial you know your rights â and that includes the right to say no. You donât have to act for a client if it makes you uncomfortable.
Guidance on dealing with insistent clients is available in the FCAâs handbook, but it is important to understand your regulatory requirements, the risks posed and how to mitigate future complaints.
A proactive approach
So, youâve outlined your professional advice and the client has rejected it, preferring a different course of action. You now face a choice, do what is asked of you or politely decline, which will no doubt end your working relationship.
Deciding to act for the client exposes you to several risks. They are:
- Regulatory scrutiny if the transaction goes wrong
- Reputational damage should a complaint be lodged against you â not to mention the time and cost of dealing with the complaint!
- Potential liability if financial harm arises
What do you do? This will depend on how insistent the client is, but being proactive is a must. It could simply involve ensuring your compliance systems and staff training are up to date, so you are best placed to manage the situation. In higher stakes circumstances, you might need legal advice.
Your regulatory requirements
The FCA is clear on the matter of insistent clients, placing the emphasis on providing appropriate advice, communicating transparently and maintaining detailed records.
The regulations require you to give suitable advice, tailored to the clientâs needs, circumstances and risk tolerance. This means you must assess the suitability of the action they are determined to take, even if it goes against your recommendations.
You must explain clearly why the clientâs proposals are unsuitable, detailing the potential implications and risks. This dialogue should aid their decision-making process and it reinforces your commitment to their welfare.
We cannot emphasise enough the importance of documenting all of your interactions with the client, including your communications, the advice offered and rationale behind the decision that has been taken to act against your advice. These records will be critical evidence if a dispute arises.
Mitigating complaints
The prospect of receiving a complaint is undoubtedly a significant concern if you are faced with an insistent client.
Having robust processes in place should help you defend your position, as will the meticulous documentation we have described above. Make sure you obtain written acknowledgement confirming the client understands the associated risks, if you carry out their wishes. This acts as a form of consent, potentially protecting you from future complaints.
It may also be useful to seek the second opinion of a colleague or your compliance support before proceeding with the transaction. This additional layer of review can provide assurances about the suitability of your advice and further bolsters your case, should a complaint arise.
Balancing a clientâs autonomy with your duty to act in their best interests can be a huge challenge when the advice you have provided is rejected. But, with careful handling, robust processes and the right support, these complex situations can become an opportunity to showcase your commitment to the clientâs welfare and upholding professional standards.
If you would like more information about dealing with an insistent client, donât hesitate to contact us on (0161) 521 8641 or email: info@b-compliant.co.uk
