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Law Society warns restricted referrals will lead to mis-selling risk

by Michelle Abrego on Nov 29, 2012 at 12:26

Law Society warns restricted referrals will lead to mis-selling risk

The Law Society has urged solicitors not to follow the Solicitors Regulation Authority’s (SRA) new rules allowing them to make referrals to restricted advisers warning it could embroil them in mis-selling scandals.

It said it was taking the 'unprecedented step' to urge solicitors to ignore the SRA's 'liberalised' rules on recommending or referring financial advisers as it could expose solicitors to negligence claims.

The society said that solicitors could get ‘tangled up’ in mis-selling scandals if they advise clients to use financial advisers who may benefit from selling particular products.

Law Society chief executive Desmond Hudson said: ‘From the outset, the SRA’s proposals ran the risk of leaving the profession ill equipped to advise clients on which financial adviser to use for the product that they wish to procure, given a choice of a range of providers with differing interests and motivations.

‘The inevitable consequence will be that solicitors may become more open to negligence claims based on that recommendation or referral or that the profession as a whole becomes embroiled in the type of mis-selling scandal that has plagued the financial services industry in recent times.’

He said that the provision of independent advice had been one of the ‘fundamental tenets’ of the profession.

‘As such we would urge solicitors to disregard the liberalisation of the handbook in this area and continue to only recommend IFAs,’ he added.

‘On this issue, under the new rules, solicitors will not be penalised for exercising discretion. We urge them to use that discretion to only refer and recommend IFAs to clients to avoid the risk claims.’

The society also questioned the effectiveness of the SRA’s consolation on adviser referrals.

Hudson said: ‘All eyes will be on the SRA in January when it publishes the consultation responses on this issue. We hope that in the interests of legitimacy there is a clear expression of support for the SRA’s proposals in this area from stakeholders other than those in the financial services industry who stand to benefit from liberalisation.’

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50 comments so far. Why not have your say?

David Trenner - Intelligent Pensions

Nov 29, 2012 at 12:42

The Law Society seems to have missed the point that FSA have redefined 'independent' as Jack of all trades' and 'specialist' as restricted.

All solicitors should carry out due diligence on any firm they refer clients to. If, for example they have a divorce case where the client (or soon to be ex-spouse) has a pension they need to refer to someone who knows a great deal about pensions, rather than someone who knows a little bit about mortgages, life assurance, ISAs etc

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Nov 29, 2012 at 12:49

Restricted = Specialist.

Ha. Very good!

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Ian Lees

Nov 29, 2012 at 12:53

What a confusing interpretation of Independent and even more so for " specialised ". Being the Law Society one might expect them to know the real meaning of words and the English language. The redefining of words by the reckless FSA merely brings with it more confusion and illiterate individuals who come up with their own interpretations. Imaginge what would happen if these restricted advisers had to go to Court - to defend themselves . .. as being " specialised ", restricted or just confused. If the adviser is confused - god help the consumer. Being " specialised " in for example pensions my mean an individual has a lotta lotta knowledge - but is further restricted by [placing business with one company - referred to as "Tied ", some might be "multi tied" - but none of them are Independent . To slag off independent as a " Jack of all Trades ", is a regrettable slur, and a severe lack of knowledge - or perhaps . . . just " restricted".

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IFA Surrey

Nov 29, 2012 at 12:58

And 'Independent' = Jack of all Trades who knows a little bit about mortgages, ISAs and life assurance. All that work to get my QCF Level 6 seems a bit of a waste now... Sensible comments please David..

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David Trenner - Intelligent Pensions

Nov 29, 2012 at 13:01

Ian, I probably should have said that independent can include 'Jack of all trades', but if you look at the FSA Guidance you will find that that is effectively what they are saying. If somebody comes to you with £100 a month to save you must tell them about personal pensions and ISAs and MIPs and bank accounts if you wish to call yourself independent.

AIFA has very sensible renamed itself APFA. Solicitors should be referring clients to a Professional Financial Adviser, independent or restricted as appropriate.

Smithling, read what the FSA have said and tell me where you think specialists are likely to fall.

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David Trenner - Intelligent Pensions

Nov 29, 2012 at 13:04

IFA Surrey, When your GP sends you to see a cardiac specialist you will find that he does not deal with ENT cases as he is restricted to dealing with his specialist area - and rightly so!

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Jeremy Edwards

Nov 29, 2012 at 13:10

It does seem that the SJP marketing budget has been well spent - now they have an easy in to any solicitor.

I agree strongly that any solicitor has to do some robust due diligence; the answer should depend on the question, not on some stereotyped idea of what ought to be best.

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Allan Maxwell

Nov 29, 2012 at 13:14

Sorry David while I agree with your definition of a specialist. I think I'm fairly clear that the FSA have not equated this to Restricted in any way shape or form.

While a Specialist may be Restricted there is absolutely no guarantee that a Restricted Adviser will be a Specialist.

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Nov 29, 2012 at 13:17


Using your example. Rightly so indeed. I agree.

Your metaphor is flawed though. If the GP is more competent in cardiac medicine than the cardiac specialist they might refer me to, then I'll stick with the GP thanks. I'm not sure why the ENT comes into it.

However, in our business there are many MANY "specialists" that are significantly more dangerous to a client than a "Jack of all Trades."

Using your reasoning, I can read a book about putting up shelves and call myself a "specialist carpenter" while implying that a fully qualified carpenter is a "jack of all trades" in a dismissive manner implying that because somebody can cover all areas they are somehow less competent in them?

So historically a mortgage adviser is more suitable to arrange your mortgage than an IFA who includes mortgage advice?

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Nov 29, 2012 at 13:17

... basically what Allan just said. Except I made more of a meal of it.

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Philip Wise

Nov 29, 2012 at 13:22


At least we know which type of advice you'll be offering!

The problem with your metaphor is that you need to go to the GP to get a referral to the cardiac/ENT specialist. Your system would work if people only went to generalist independent advisers first, and then were referred on. That's actually quite a good model for financial advice.

But, in your case (and I'm assuming you'll be restricted to pensions by product type), you are unlikely to know sufficient about other areas to know when a pension isnt a solution.

Pensions are already only a good solution for part of a clients retirement funding needs, due to lack of flexibility and government control/interference, and how will (advisers like) you deal with the grey areas (e.g. when buy to let or VCTs might be part of the retirement solution) without bias? It's likely that (advisers like) you will push their own solution, particularly where the answer is not clearcut.

Sorry if I sound like I am having a go at you personally. It's not intended as I dont know you - I'm just trying to make a point that those who are restricted by product type will be as biased as those who are restricted by provider.

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Kate Brookes

Nov 29, 2012 at 13:23

Well, if the law society doesn't get it, what chance do the general public have of understanding the difference between independent and restricted ?

They also still talk in terms of product sales, boy we've got a long way to go to change the general perception of financial advisers.

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David Trenner - Intelligent Pensions

Nov 29, 2012 at 13:25

Alan, You have hit the nail on the head. A restricted adviser might be a specialist advising in a relatively narrow area, or he could be the Man from the Pru offering a restricted product range.

A solicitor will probably be more comfortable with a specialist than with the Man from the Pru. That having been said the Man from the Pru is an important part of the process of selling financial products, and most financial products need to be sold.

Smithling, I have only ever gone to a mortgage adviser for a mortgage. Why pay the charging rate for someone qualified to level 6 if you do not need to?

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David Botterill-Scott

Nov 29, 2012 at 13:30

I'm not sure why a restricted adviser would be prone to bad advice.

Apart from the fact that advice is what is being charged for, and is no longer linked to sales of products, why would one deliberately choose a panel of poor quality providers, especially when commission no longer plays any part?

One of the main aspects of chanelling large amounts of business to a reduced number of good quality providers (having done due diligence to back up your choices) is that you would be negotiating to ensure that your clients got a better deal from the providers than would be available to to the rest of the market.

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David Trenner - Intelligent Pensions

Nov 29, 2012 at 13:31

"I'm just trying to make a point that those who are restricted by product type will be as biased as those who are restricted by provider."

Did you really expect me to allow that to pass without comment?

"But, in your case (and I'm assuming you'll be restricted to pensions by product type), you are unlikely to know sufficient about other areas to know when a pension isnt a solution."

Philip, I don't know about you, but to date I have passed more than 20 professional exams and have been an examiner for the CII on 5 different papers, only 3 of which were pensions.

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Nov 29, 2012 at 13:32

Proud to be Independent and have a very wide knowledge of finance.

I have 13 different diplomas in all kinds of Finance and would not like to be resticted to a very small pool of products.

You cant buy 40 plus years of experience gentlemen.

The Law Society are NOT fools.

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Darren Lloyd Thomas

Nov 29, 2012 at 13:35

Am I going daft or are we not all missing the point here?

Surely this is an excellent piece of news? The Law Society have actually stood up to the regulator and have offered firm guidance to their members. I think this is comendable in these times.

I'm keeping this piece ready for the next time I run into a lawyer who is gleefully recommending a tied adviser!

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Nov 29, 2012 at 13:38

I dont think David understands the difference between independent & resticted. independent doesn't mean jack of all trades to me but having the full set of solutions for clients.

I dont suppose the Law Society has any problem with referring to a specialist IFA. But specialists are only useful (like your cardiac specialist) once the right diagnosis has been made by an IFA.

The point about referring to restricted advisers is that they are restricted, whether or not they are specialists. They hardly have any solutions at their disposal. They still represent their favourite providers, not their client. How can this possibly be as good as IFA advice. The IFA badge will still be "gold" standard after RDR. SJP will still be salesmen.

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Ian Lees

Nov 29, 2012 at 13:39

Restricted advisers do not necessarily provide bad advice - it is restricted advice from the company they are affliliated to. Companies like St James Place are excellent amareketing companies - and provide and distibute their selection of products and services - restricted to their specific profit seeking areas - leaving unprofitable elements of their planning exposed - and not followed up. The reason fo rthis is the profitability of the product sold.

The specialist will fall down where he or she is only dealing in one area e.g Insurance Bonds in the 1980's ( when the derriere fell out of le market. More recently with mortgage advisers - as property sales fall ( e.g Nationwide chief economist on Radio 4 this morning ). More latterly with pension sales going down as a result of tinkering by successive governemtns - and a lack of knowledge or commitment in this area. The tinkering by the FSA and soon the FCA - restricting advisers to selective products or services.

Advisers in Aifa or APFA have been forced down the route of taking on tied agents restricted agents - to keep nuumbers up and with Price Waterhouse confirming numbers down from 30,000 to 10,000 has been a result of extreme force applied by successive no regulating authoirities ie PIA FIMBRA FSA and FCA - my goodness we have had them all ! Not what one might record as a success.

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Bryan J Hollingsworth

Nov 29, 2012 at 13:45

The FSA Final Guide on RDR June 2012, specifically states an IFA can be 'independent' and only advise on pension income options such as drawdown and annuities provided they operate only in this restricted market. So my understanding is you can be 'specialist' and 'independent' according to the FSA wording, which might suit David Trenner at Intelligent Pensions

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Simon Webster1

Nov 29, 2012 at 13:46

What this does throw into sharp relief is that the SRA is as out of touch with the people it regulates (and indeed supposedly regulates for) as the FSA is with "us".

We have an unaccountable regulatory class marching to their own agenda with common sense and positive consumer outcomes totally out of the window.

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Neil Whitaker

Nov 29, 2012 at 13:47

How could we have possibly reached the stage where the SRA (part of the Law Society Group, albeit acting independently in its work as a Regulator) can issue guidelines following which the Law Society then takes the unprecedented step of urging its members to ignore those guidelines?! You couldn't write it could you?!I am pleased to see the Law Society voicing its disapproval of this ridiculous decision by the SRA and remaining consistent with its well-worded, formal response during the consultation process.

Ian Muirhead hits the nail on the head when he says "The nub issue is that the dictionary definition of independence, which is also understood by the man or woman in the street and provides the basis for the principles underlying the solicitors' Code of Conduct, is being free from the influence of third parties. The FSA now wants us to believe that independence means something different. So solicitors will remain subject to the dictionary definition in their own conduct but not when they refer clients to external financial advisers. Is that not perverse?"

Ian, I couldn't agree more.

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Nov 29, 2012 at 13:54


"Smithling, I have only ever gone to a mortgage adviser for a mortgage. Why pay the charging rate for someone qualified to level 6 if you do not need to?"

I'm not sure you thought about that statement. With your way of thinking we'd all be out of jobs and a lot of people would be incorrectly self advising through comparison websites.

Going back to your metaphor. If I went to the doctor who treated me for a cough only for me to find out 6 months later I had cancer, I would be pretty angry.

I would be far more angry when the doctor turned around and said "sorry about that, I'm a cough specialist not an oncologist, I just gave you the best treatment for what I'm qualified to do."

"Well why the hell didn't you refer to me to somebody that could've looked at all areas in case it was more serious than a cough?"

"Well.. because... well I wouldn't have got paid."

There's nothing wrong with restricted advice. There's a place for it. But let's not pretend it's because restricted advice is "specialist" advice. It's not. It's restricted.

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Julian Stevens

Nov 29, 2012 at 14:04

What will make the due diligence process even harder for solicitors will be to differentiate between:-

1. true IFA's with no specific affiliations to any product or provider, and

2. firms that badge themselves as IFA and which are indeed authorised to provide WoM advice but whose management policy is to lean heavily on all their advisers to shovel as much money as possible into their own funds. If true I.F.Advice is sought then, anecdotally at least, its cost is priced at a level such as to deter all but the most well-heeled customers.

The FSA's recent focus on DIF's suggest it to be aware of this problem but so far it seems to have done nothing (except probably have lots of internal meetings on the subject and issue an assortment of not very specific statements to the industry).

The solution, of course, would be for the FSA to force firms such as TL to split their advice arms between advisers who represent the DIF side of the business and those who provide true IFAdvice. Then again, that would cause TL major problems because any comparison between the crappy performance of its own range of funds against the best available in the open market would mean that nobody would ever end up being referred from the IFA arm to the tied arm.

Yes, adviser charging may eliminate one aspect of adviser bias, but it won't eliminate the likelihood of TL advisers (and others working for similar set-ups) not meeting their DIF sales targets becoming subject to tough meetings that'll basically boil down to: Get with the program or start looking for another job).

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Philip Wise

Nov 29, 2012 at 14:05


That's very nice. But restricted advisers will still be selling the solutions they are restricted to, rather than taking an independent viewpoint, regardless of the number of exams they have got.

I did try to make it clear that I wasnt casting aspersions on you, but trying to make a general point.

If I were restricted, I would fall into the same trap, and that's one of the reasons I dont want to be restricted.

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Nov 29, 2012 at 14:19

I think David's gone for a cup of tea.

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David Curley Dip extrodinaire

Nov 29, 2012 at 14:24

My concern here is that there is an inference that a 'Jack of all trades' is someway not as good as a specialist, and my experience of specialists in F/S is that they do not provide an holistic service and therefore do not cover off the knock on effects of their advice on other areas.

I have made the decision to remain independent so I can be a generalist and be able to refer to specialists for trust work or Final Salary transfers, I am sure that the likes of SJP will try and do the trust work themselves and the horror stories I hear from clients of SJP salesmen selling Property protection trusts for £6000 to £8000 indicate to me that they cannot be called specialists just purveyors of expensive products from a restricted range.

One solicitor I spoke to recently has said that with everything that going on in F/services he is frightened to pass any referrals to any Financial Advisers as he does'nt expect them to be around for many years and he does not wish to have the client trying to complain to him after the adviser has left the industry.

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David Trenner - Intelligent Pensions

Nov 29, 2012 at 14:32

Smithling wrote: "Going back to your metaphor. If I went to the doctor who treated me for a cough only for me to find out 6 months later I had cancer, I would be pretty angry.

I would be far more angry when the doctor turned around and said "sorry about that, I'm a cough specialist not an oncologist, I just gave you the best treatment for what I'm qualified to do."

"Well why the hell didn't you refer to me to somebody that could've looked at all areas in case it was more serious than a cough?"

"Well.. because... well I wouldn't have got paid."

There's nothing wrong with restricted advice. There's a place for it. But let's not pretend it's because restricted advice is "specialist" advice. It's not. It's restricted."

I do not know if you are missing my point deliberately or not.

I took the view when I started out in this industry/profession that I wanted to be qualified at what I did. Not because there are not parts of the industry that do not require qualifications, but because I wanted to be the best I could for myself. As I lack certain sales skills I have generally relied on others to refer their clients to me.

Your GP knows enough about cancer to refer you to an oncologist, but he cannot do the work of the oncologist. Years ago I got a football in my nose (scope for mockery I know!) and my doctor who told me he thought I had a deflected septum, but he sent me to the hospital just in case. I was happy to go, although it turned out he was right.

Subsequently I slipped a disc playing football. My GP said he thought it was sciatica, but he referred me to the hospital anyway. Three days later I had the op, as a result of which I am still walking.

I cannot understand why people try to be all things to all men, and do not realise that that makes them less professional. Years ago I was offering a pension transfer service and I spoke with an IFA who said that he had a few enquiries and he was going to do them himself. I bumped into him two months later and he was honest enouigh to tell me that he had not yet looked at them such was his workload.

You say that restricted is restricted and I say restricted is good, not bad! Would you ask your divorce lawyer to advise you on setting up a company? Or to defend you in court against a malicious charge? These guys are restricted - and professional!

I see you don't pay for referrals. That's ok I have plenty of IFAs who do!

PS MR I am not a specialist typist, no cuppa for me!

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Jonathan Kirby

Nov 29, 2012 at 14:32

The whole thing is a total dogs dinner and the closer we get the more I feel that at the very least the TSC's 12 month delay should be imposed.

If people within the industry cannot get their heads round this the public will have no chance whatsoever.

The words are all wrong.

We need words like 'Impartial' to clearly indicate where an adviser has no restrictions as to choice of company he or she recommends.

For those who have clients interested in some of the more esoteric then 'Comprehensive' may be a good word to use.

For the likes of SJP and the life companies 'Product Sales Representative'

or if they want to dress it up 'Sales Executive for the ..... range of products'.

However, there are none so blind as those who will not see. RDR is the Sinclair C5 of regulation, doomed to be consigned to the scrap heap and a source of amusement in years top come that anyone could be so stupid.

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Richard Hardy

Nov 29, 2012 at 14:36

And consumers are supposed to understand all of this nonsense!

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Nov 29, 2012 at 14:57

I read the FSA wording to mean that specialists (eg Pensions) can call themselves Independent Pensions Advisers but I'm not sure they can call themselves Independent Financial Advisers; or at least it seems wrong to me if they can!

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Richard Hardy

Nov 29, 2012 at 15:01

All those clambering to regulate the 'Press' should have a look at the financial services industry and how regulation should not be done.

They may think twice about it!

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Well Now

Nov 29, 2012 at 15:20

restricted - Better trained, more resources, better compliance, full suit of solutions.

IFA- stuck in a bubble!

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Dan Rear

Nov 29, 2012 at 15:26

Its not too late surely to call a halt to the whole sorry process; the West Coast Franchise fiasco was pulled after all, seemingly after everything had been agreed. The fact that the Law Society/SRA can't agree on the basics of referrals come 31-12-12 says it all.

And, yes, I am fully "SPSd" up, and ready to carry on post RDR.

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Keith Cobby

Nov 29, 2012 at 15:47

I think the medical comparisons are useful. Surely there needs to be a recognised financial planner professional (call it Chartered) who is paid purely on a fee basis. No commission/adviser charging. They would refer to speciaists for mortgage, pension, investment. advice as necessary.

Financial salesmen paid by commission/adviser charging/fees would be a separate profession. These would offer their own range either tied or multi-tied.

These terms 'independent' and 'restricted' seem to me to be meaningless and the public certainly will not appreciate the difference.

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Nov 29, 2012 at 16:05


I'm not missing your point. I get your point. I partially agree with your point.

You appear to be missing my point. Using your example I am saying that I personally feel that going to a restricted adviser first is the equivalent of going to the nose specialist BEFORE you go to your GP.

In other words if you hadn't gone to the GP first then he may have missed other injuries because the specialist was just looking at your nose and didn't notice the neck strain you had too.

Since we're using personal examples, my mother had a bad back for years. She ended up having a few operations and still it was terrible. They cut bits off, put bits on etc etc all done by her Harley Street specialist.

It was after she gave up and changed doctors that they did a full check up and realised the problem was actually her feet! I'm not a doctor so I don't know the ins and outs, but I do know that one operation on her foot later and she was infinitely better... because somebody had looked at the whole picture. Maybe I have subconcious bias in defence of the old girl...

I think my point is that I don't believe medical metaphors are fair. Because, like you, I don't believe that a GP can cover all areas adequately. I do, however, believe that an IFA is (in theory) adequately qualified as to render a restricted adviser unnecessary in the vast majority of cases. I think it confuses the clients, passes them from pillar to post unnecessarily and all in all creates a lack of confidence in the industry. (I know you will want to argue it should create confidence by passing onto a "specialist", we'll agree to disagree).

I think the reality is, as always, a case of two advisers staking their claims to their area of the profession.

You have reservations about IFA's as you have undoubtedly seen some horrifically clueless 'holistic' advice that's encroached on your area. Equally, I have seen far too many people who frankly are just not bright enough or competent to be doing the job, so they "specialise!" and hide behind restricted advice.

It does, as always come down to the individual adviser. I'm sure you're well worth the money as I like to think I am. Let's just hope all the idiots in our respective areas lose their licences and we'll be able to sing each others praises in a few years instead of cast dispersion. Best of luck.

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Phil Castle

Nov 29, 2012 at 16:33

Inclined to agree with Jonathajn Kirby and dan Rear. I have my SPS and havbe been adviser charging for several years, but I still think the TCS were right to suggest a one year delay and with the continuing unforseen problems, I think the TSC were showing common sense. Do I think RDR should be delayed now? No, I think we need to show it up for the dogs dinner it has become by going ahead.

Smithling and David Trenner both make good points.

Like David Curley, I have chosen to remain independent and describe myself as a generalist and refer to specialists for Final Salary transfers. I do however have "specialist" qualifications for long term care and equity release/home reversions (although I have never done a home reversion in my life), but I would NOt refer to myself as a "specialist" as I rarely do either and even if I pass my STEP exam next year, i will not be describing myself as a Trust specialist as I am not, I will simply have a better understanding of what I DON'T know and be in a better position to refe to a specialist (such as David Trenner).

Under adviser charging I already don't pay or receive anything from solicitors or accountants for introductions, BUT if I undertake work or take part in the meetings, then I will charge for my time, to the client.

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Ian Lees

Nov 29, 2012 at 17:38

Unfortunately, given that no one will take responsibility for the bungling Banks - the ripping off of people with their endowments - their pensions - itseems unlikely anyone will take repsonsibility for " regulation ", or the distress and stress and costs for insurance companies and insolvent banks - to do a U turn - or act with any integrity or minimum level of professionaism. What a bunch of bungling beurocrats - from the kilted and jilted of the remnants of financial services in Edinburgh - to the caped crusaders of Canary Wharf. It would be nice to see someone with a proper objective - or a real reason . . .or have full discussions or realise that products from insurance companies need to be sold - and that unlike Bread and Milk - protection is not purchased over the counter at tesco - where every little helps tesco. The claims companies will enjoy the misselling of pensions life assurance - becasue no one in the FSA or in Governemtn cares. It is criminal that the FSA and the Chartered Insurance Industry - cannot reach any reasonable or sensible conclusion - and the amounts of money chucked away by insurance companies e.g Scottish Widows sponsoring the faculty of the ICAEW and e.g J P Morgan and others sponsoring RDR workshops - to what end ? With so many having left the industry of insurance - and so many on their way - fed up with the barracking beurocrats - who have no duty of care - no sense of responsibility - and have left UK Plc decimated for generations. Still there is plenty of room at university's now ? Anybody want a university grant it finishes at retirement age in the UK ? i.e it stops being owed.

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Billy via mobile

Nov 29, 2012 at 22:39

Phil castle speaks sense and agree with the comments

@MR you are missing the point, a restricted adviser can be whole of market and not a quasie independent who disregards certain products as not relevant, investment trusts due to gearing, illiquidity etc.

Do you use Neil woodfords high income oeic or his Edinburgh investment trust?

None of us know what we will be in the new regime, we know what we would like to be but ultimately our regulators will decide.

We do get so side tracked when the clients just want simplicity

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Nov 29, 2012 at 23:07

@ Billy.

I dont think I am missing the point. But I havent a clue what point you are trying to make.

Much comment in this thread seems to be coming from a hazy understanding of restricted & independent.

My understanding is you can be independent GP, independent specialist, restricted GP, restricted specialist.

I think David Trenner is independent specialist, but not totally sure. He seems to think specialist = restricted, which is wrong. The Law Society can clearly see that gp or specialist is fine, so long as you are an IFA.

The SRA doesn't care that restricted is more limited than independent.

If I felt the need to refer my client to a specialist I would make damned sure they are an independent specialist, because I care enough about my clients not to refer them to a self-serving (or plain lazy) restricted business.

I know absolutely what I will be in the new regime. INDEPENDENT.

Billy, you need to get your business model sorted out & PDQ.

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Ian Lees

Nov 30, 2012 at 06:40

It is clear a " restricted adviser " in the whole of market is a contradiction in terms - he/she is limited " resticted " to an area of specialism. What a silly comparison with regard to Neil Woodford his OEIC and Edinburgh Investment trust ! I did not know Neil Woodford was now an " adviser ?" Secondly to compae an OEIC with an Investment Trust is not relevant - nor does it make any serious point..

To be frank we are looking at the exploitation of commodity - the consumer ! A tied agent or restricted agent wishes to exploit their commodity'sfor profit e.g Banks and Insurance companies - usint their client banks ( their commodity ) for profit - and there is nothing wrong with profit - it is the ethics of the strategy and the way it is delivered. Some companies rely on sales and marketing - designed to attract commodities e.g St James Place. There is nothing wrong with that. Banks and Insurance companies rely on unregulated force, untehical and immoral strategies and high pressure sales by incompetent employees - wage slaves to their employers

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Dolores Chimichanga

Nov 30, 2012 at 11:09

I am an IFA and planning to stay an IFA next year . I don't ever come into competition with SJP and I dont really understand why the majority of IFAs have such a hang up with them. Let's be honest most IFAs are following a restricted agenda now and are hanging on to the 'IFA marketing badge'. I dont think this will be enough in 2013 and many more advisers will become restricted. Personally I dont think this will be a bad thing if as Billy states they are restricted whole of market.

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Nov 30, 2012 at 11:22

If you want, you can call yourselves restricted due to products which you do not wish to consider or advise on (eg exclude warrants, EIS's) but still have all the providers at your disposal. Some people sem to think that restricted means only using a handful of providers as well as products.

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Phil Castle

Nov 30, 2012 at 11:25

Dolores - I prefer to see most IFAs remaining independant and I would prefer to see the FSA ensure that greater clarity re Independant v restriction occurs. The best way to do this would be to change the titles to Unrestricted and restricted and then not just require the "restricted" firm or adviser to verbally explain their restriction, but to do it ON THE RECORD. The FSA only require the restriction to be explained verbally at the moment I think, so bearing in mind how many clients never had the printed document explained to the verbally explaining Independant versus restricted, requiring ti to ONLY be verbal will mean ti is one persons word against anotehr as to what ahs been said or explained.

We probably will remain restricted and I fully support Gill Cardy and IFA Centre in their attempst to keep the Independant tag. If the FSA used a dictionary (rather than dogma), then Unrestricted and Restricted, then with and explanation of whetehr tied or independant would actually make more sense.

I bet the FSA NEVER did any research on whether that would make more sense to a consumer? Even child games like dungeons and dragons can explain issues like that i.e. Lawful good, lawful evil, chaotic goo and chaototic evil with neatrality thrown in the middle.

The Independant v restricted debate shows just how politivcal the FSA really are as it is like party politics i n the UK or perhaps even more appropriately the USA where there were not supposed to be any parties originally to avoid factions occurring.

I have no axe to gring against tied advisers including SJP and I think that for some clients tied is more suitable. Th best options would however be to have a clearer explanation of status and advice being given to a client whioch could be done with a simple ven diagram.

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Phil Castle

Nov 30, 2012 at 11:32

PEK - Whilst I agree with you as Gill Cardy has said, why describe yourself as restricted by placing a restriction yourself when it can be left to your clients to place the restriction by remaining Independant and clearly stating your areas of expertise and that to go further where you identify a client where an EIS may be appropriate (it is after all in the R02 syllabus I think as well as R03?), we have to know enough about them to identify whether they may be appropriate and then act accordinley. That could mean introducing the client to a restricted (non tied) adviser who specialises in EIS and doesn't do pensions perhaps.

If you don't have G60 for occupational pensions (I don't by choice) then you can remain Independant and refer to a restricted (non tied) adviser who only does occupational transfers. What happens if you have G60, but don't want to advise on pension transfers becuase (like me,) you think they are a nightmare and best left to someone elses PI? On that basis the adviser would then be placing the restriction by choice rather than lack of qualification.

I really don't think the FSA have thought through the Independant v restricted properly and as far as I know there has been no published evidence of what the consumer actually thinks of these titles.

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Julian Stevens

Nov 30, 2012 at 11:56

I've only lost one client to SJP because their rep spun him a good story on their asset/fund allocation process. As stories go, sounded to him better than mine. Okay, fair enough. Where he'll lose out, though, is on the performance of the SJP funds in which he'll be invested, which (to date) is patchy to put it mildly.

Then again, around the same time I acquired a client from a local SJP firm that had hitherto been independent, so it's more or less balanced out and the client who defected was totally devoid of humour (and his wife was worse) so I won't miss them.

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Nov 30, 2012 at 13:55

Dear @MR 13.38 yesterday look at your comment ' They hardly have any solutions at their disposal' - do you feel this? A restricted restricted yes i agree. However, you can have a whole of market restricted who has access to all an IFA has but possibly chooses not to deal with certain products i.e. film schemes, etc,

They have everything an IFA has alebit a ridiculous title set by our regulators.

Let me clarify my point about none of us know. We are all working to the guidelines we have now and our understanding, along with our compliance support, and have made our choice to either be restricted or independent. Ultimately though none of us know now if the regulators will deem us restricted or indepedent. If you know please share with us as it will save us all a lot of time and resources. I agree with you independence is the way forward. Thank you for the advice on my model but rest assure it is in place.

Why I mentioned the investment trust v collective - dont recall saying Woodford is an adviser though - is that our compliance team rasied the question by saying too many post RDR IFAs are simply discounting investment trusts and this cant be done. Have a look at the 2 Mr Woodfords I mentioned and please explain why you would use the collective over the investment trust version (@ Ian Lees). I ask this on a genuine basis and look forward to everyone elses thoughts as we are all in the same situation. I do fully understand the difference between the investment vehicles.

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dominic browning

Dec 01, 2012 at 00:44

I am intending to go whole of market restricted - my restriction will be generally avoiding esoteric products not protected by the FSCS and also possibly restricting to one or possibly two platforms as having more defeats the object of platforms in the first place.

I cannot guarantee my clients's reactions but I honestly feel they will fine with it. What will be interesting is when the FSA catches up with all those IFAs who still carry the name IFA but offer even more restrictions than I will.

I strongly believe that by January 2014 there will be more whole of market restricted than IFA.

That is why APFA and the SRA are letting in restricted - they are not suddenly opening the doors to those currently tied, they just want to keep in with the large swathe of current IFAs who will continue to exclude esoteric products in their recommendations and will have to change their title though no fault of their own following the impending car crash which is the RDR.

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Ian Lees

Dec 01, 2012 at 05:26

I am going to become a postman or a bus driver - there are less restrictions - and avaialble in the whole of market . . .or as we call it "the area !" It appears that it is the FSA which is restricted - due to their limitations and on-going regulatory failures - allowing banks such as LloydsTSB Group ( who are major shareholders in St James Place ) to offer their restricted and limited services - as being " almost independent ".

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Ian Lees

Dec 01, 2012 at 05:26

I am going to become a postman or a bus driver - there are less restrictions - and avaialble in the whole of market . . .or as we call it "the area !" It appears that it is the FSA which is restricted - due to their limitations and on-going regulatory failures - allowing banks such as LloydsTSB Group ( who are major shareholders in St James Place ) to offer their restricted and limited services - as being " almost independent ".

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