Why financial advisors won't sign forms?

If you’re someone that has ever worked with an FCA-regulated financial advisor, you’ve likely noticed how hesitant they can be to sign financial forms, sometimes unwilling.

These can range from transfer requests to mortgage declarations. So, if you're wondering why financial advisors won't sign forms, it's often tied to strict FCA regulations and personal liability concerns.

For the most part, it boils down to regulation and risk; advisors are trained to protect themselves and their firms. 

FCA regulation role

Ultimately, the FCA is the UK’s financial watchdog. It puts in place strict rules that financial firms and professionals are to abide by.

The FCA sets these rules to protect clients from poor financial advice and mis-sold products. These rules come with serious consequences if things go wrong.

Advisors can face serious consequences if regulators find they’ve signed a form that is incorrect or unclear. This would likely include fines, legal action and in some cases the loss of their professional license. The risk remains, even if the mistake was not the advisor’s fault.

Fear of liability

Financial forms will often ask advisors to “verify”, or “approve” information. From an advisor’s view this can be a legal minefield, although to many on the surface this can be seen as harmless.

There are a multitude of things that could go wrong. Can you imagine an advisor being asked to confirm the transfer value of a pension and the number turns out to be wrong? This could lead to the client losing substantial amounts of money.

Yes, the pension provider may have made the error, however the advisor could still take the blame if they had signed off on it. This fear of liability is one of the main reasons why financial advisors won't sign forms, even when the request seems simple.

Signing forms often shifts responsibility, and with regulatory tightening over the years, advisors have become more wary.

It may fall out of their scope

A key reason why financial advisors won't sign forms is because the documentation may fall outside their authorised role, risking non-compliance. If an advisor signs something that does not fall under “financial advice”, they run the risk of stepping outside of their professional boundaries. They can cause huge problems with their firm’s compliance team.

The majority of advisors will have professional indemnity insurance, this is there to cover them if they lose client’s money because of negligent advice.

This insurance only covers activities the FCA has approved, signing the wrong form would likely cause the insurer to void their coverage.

Compliance culture

Several financial scandals have cropped up over the past few years, things like mis-sold pensions and high-risk investments. Due to this, many firms have bolstered their compliance departments who usually set internal policies that go further than the FCA’s guidelines.

Another reason why financial advisors won't sign forms is that internal compliance policies often strictly forbid them from doing so. Regardless of how basic the form is, these internal rules leave the advisor with no choice.

Firms establish strict compliance cultures to reduce risk. Unfortunately, it’s usually the consumer who feels the impact the most.

Advisors still want to help

Advisors want to help and they know that signing a form on your behalf is likely to speed up the process of a mortgage or pension transfer.

As much as they want to help, they need to also protect themselves and their firms.

If you're faced with a situation where your advisor declines, ask them directly, they’ll likely explain why financial advisors won't sign forms and offer alternatives.

Your other option is to ask the receiving party (pension provider/lender) if you have other options to confirm the details.

Better systems are needed

For years people have said, the industry needs to improve coordination between advisors and financial firms. Many believe financial firms need to make forms clearer and fairer.

A point has been made to change forms so advisors will only need to confirm information that falls within their role. This reduces confusion and lowers the risk of signing something accidentally.

Until better systems are introduced, the issue of why financial advisors won't sign forms will remain a common point of tension between firms and clients. Yes, it can be frustrating. The truth is, advisors are just being sure to be careful, not difficult.

Get expert advice

The FCA holds advisors to a high standard. Although it’s a good thing, these standards make them cautious, especially when signing forms.

Liability and compliance rules remain a constant worry. This can be annoying from the client’s point of view, but it’s usually about steering away from issues that can crop up later down the line.

Speak openly to your advisor, ask for their help getting to a solution. The majority will be more than happy to help, but in a way that keeps all parties protected.

Let Regulated Advice match you with a financial advisor for expert advice.