A £250,000 instruction, an 81-year-old client and a bonus four weeks away

Pause, record, adapt - do not execute the instruction on that call.

• Vulnerability (FG21/1). The guidance identifies four drivers: health, life events, resilience and capability. Edith has all four in play - recorded cognitive impairment, bereavement, total dependence on the state pension, and possible difficulty understanding. Vulnerability can be temporary and the firm must not assume incapacity, but it must respond.
• Consumer Duty (PRIN 2A). The consumer support outcome requires support that meets her needs without unreasonable barriers. The cross-cutting rules require the firm to act in good faith, avoid foreseeable harm, and enable her to pursue her financial objectives. Both failing to act and blindly executing a £250,000 liquidation on an emotional phone call would be foreseeable harm.
• Practical steps:
  • do not trade on the call; book a face-to-face or video appointment and confirm it in writing;
  • with her consent, invite her daughter to attend - the daughter has no authority over the account unless she holds a registered lasting power of attorney, and 'she handles all this' must be verified, not accepted;
  • check whether an LPA or deputyship exists and is registered; if it is, the daughter still needs to produce it, and the firm must check its scope;
  • assess capacity for this specific decision (Mental Capacity Act 2005 - decision-specific, with a presumption of capacity);
  • record what she said, what was agreed, and why the firm paused;
  • offer information in a different format and signpost specialist support, such as Age UK or the Office of the Public Guardian.
• Simply refusing to act and closing the account would create the very harm the Duty is designed to prevent.

The value assessment has to be redone, not repeated from last year.

• The maths. 1.15% + 0.80% = 1.95% a year, about £7,995 on £410,000. After a £250,000 withdrawal, roughly £160,000 remains - but the percentage fee does not fall in line with the reduced complexity or the reduced service.
• The Consumer Duty price and value outcome requires the total price to represent fair value, and the firm must be able to evidence that assessment. Questions the file must answer:
  1. Is a discretionary managed mandate still the right vehicle for a much smaller, income-dependent portfolio? A smaller pot may not justify discretionary management at all.
  2. Where does the £250,000 sit while it is being raised and paid out? Trelawney's cash account pays 0.1% - if the firm still earns a fee on that balance, that is a value red flag.
  3. Is the charge still fair if the portfolio is largely de-risked into cash or short-dated bonds?
• Suitability (COBS 9/9A). The withdrawal itself is her instruction, not advice, but the adviser must still advise on how to raise the money: which holdings to sell, sequencing, capital gains tax on disposals outside an ISA, and the effect on her income.
• Wider consequences she must understand (consumer understanding outcome). A £250,000 gift is a potentially exempt transfer for inheritance tax, subject to the seven-year rule, and could be treated as deprivation of assets if she later needs care. PROD and the consumer understanding outcome require the firm to check she genuinely understands those consequences, not merely that they were disclosed.

The conflict is live, and disclosure alone will not fix it.

• PRIN 8 and SYSC 10. The firm must identify and manage conflicts of interest. An AUM-based bonus rewards exactly the outcome - money staying invested - that is adverse to Edith's instruction. The Consumer Duty's good faith rule and the duty to avoid foreseeable harm reinforce the point.
• COCON conduct rules. If the adviser delays, discourages the withdrawal, or steers her into an in-house solution to protect his bonus, he breaches Rule 1 (integrity), Rule 2 (due skill, care and diligence), Rule 4 (treating customers fairly) and Rule 6 (paying due regard to customers' interests).
• What he should do:
  1. escalate to the SMF16 or head of compliance immediately and ask for the case to be reallocated or jointly handled;
  2. record the conflict and the mitigation on the client file;
  3. put her stated timeline on record so that any delay is visibly driven by her needs and her capacity assessment, not by his bonus date;
  4. ensure the eventual decision is made and evidenced by someone without an interest in the outcome.
• At firm level: the incentive scheme itself should be reviewed against the Consumer Duty. A pure AUM bonus with no quality or consumer-outcome element is precisely the design the FCA has criticised; consider a quality gate, deferral, or clawback.
• If the firm finds it has already delayed or discouraged a withdrawal for bonus reasons: consider redress, record a breach, and - if significant - notify the FCA under Principle 11. The ethical test is simple: would the advice be the same if the bonus did not exist?