Quote Originally Posted by Clive S View Post
That is to hold the collet in place. You have to wiggle the collet in there. I take it you have been doing this, as this might have been your problem.
It's actually to extract the collet from the holder. If you don't clip the collet past the offset lip, then the nut doesn't pull the collet back out when slackened, which can leave you with quite a big headache. Off course not clipping it in also causes uneven clamping, which can lead to excess runout and things not being as secure as they could be...