Sifa managing director Ian Muirhead has raised concerns solicitors could start referring clients to tied advisers such as St James’s Place owing to changes to the definition of independence under the retail distribution review (RDR).
At present, the Solicitors Regulation Authority (SRA) requires solicitors to refer clients only to advisers classed as independent by the Financial Services Authority (FSA). Under the RDR, the criteria for independence will be toughened, with advisers who wish to remain independent needing to advise on a wider scope of retail investments, such as exchange traded funds and structured products.
The FSA has written to professional bodies reminding them they are not obliged to adhere to its definitions.
‘The definition of “independence” you use for the purposes of your requirements does not necessarily need to be aligned with our use,’ said FSA head of investment policy Peter Smith.
Muirhead (pictured) said the SRA would need to change its definition because many solicitors referred to stockbrokers who would be classed as restricted. However, he stressed the new definition should not be wide enough for tied advisers to benefit.
‘The SRA has no alternative but to opt for a different definition of independence, because of people, particularly stockbrokers, who will not offer life and pensions,’ he said. ‘It’s a nonsense from the FSA to call them restricted. From our point of view, the important thing is to keep out the likes of St James’s Place.’
Sifa was last week subject to a shock takeover by support services provider SimplyBiz, which has said it could capitalise on the acquisition by applying for accredited body status, although it stressed there were no imminent plans.