Other Citywire websites
Stay connected:

View the article online at http://citywire.co.uk/new-model-adviser/article/a638138

SRA board approves restricted referrals

by Michelle Abrego on Nov 28, 2012 at 14:37

SRA board approves restricted referrals

The Solicitor Regulation Authority’s (SRA) has agreed to allow solicitors to make referrals to restricted advisers.

The SRA board decided today that solicitors should no longer have to make referrals to independent financial advisers as the term independent was no longer appropriate.

Earlier this week, the SRA announced it had recommended the board should allow solicitors to refer to any type of adviser provided they had conducted due diligence on them and discussed it with their clients.

The SRA launched a consultation earlier this year on solicitors referrals in light of the Financial Services Authority (FSA) redefining independence.

In its consultation paper published in July, the SRA outlined three possible options for the future of solicitor-adviser referrals having been invited to reconsider its stance by the FSA which conceded that its post-RDR definition of independence might be more onerous than the one currently used by the SRA.

The three options proposed by the consultation were:

  • maintain its current rules that only independent advisers can receive referrals
  • scrap the independent requirement altogether
  • clients choose what type of adviser they want having discussed it with their solicitor

The board has backed option three.

37 comments so far. Why not have your say?

Michael Brown

Nov 28, 2012 at 14:52

What a load of W.....s!

So should I use a will writing service instead of them? Or do I give my clients best advice, unlike them?

report this

david mann

Nov 28, 2012 at 14:53

Quelle surprise!! Where does this leave Mr Muirhead of SIFA who has campaigned tirelessly (in vain it would appear) for lawyers to refer only to IFAs?

1 - 0 to St James Place

report this

IFA Surrey

Nov 28, 2012 at 14:54

Chartered was a simple solution to all of this...

report this

Philby via mobile

Nov 28, 2012 at 14:56

Sloppy journalism again - which route 2 or 3. I suspect 3 as reported yesterday

report this

Eden W

Nov 28, 2012 at 14:58

So a Solcitor can tell a client "My own adviser is an excellent chap/ess and, although in terms of current regulations, they have to be classified as "restricted", I can find no reason to think I get any less quality and breadth of advice, so I have no hesitation in recommending them to my clients either". [And the solicitor gets a reduced personal charging basis from the salesman in excahnge for referrals, as he can't accept backhanders - and it's very hard to prove that something that isn't visible (a lower charge on one client than another) is material].

So they can still charge by the minute for taking overly long with extra phone calls and letters to not complete matters in a timely fashion and now send the innocent to see SJP and Towry too.

Not what I call an intended consequential improvment in consumer outcomes from RDR

report this

Darren Lloyd Thomas

Nov 28, 2012 at 14:59

I contacted Simbly Biz's SIFA today to see how much to join.


I guess this finnishes them off then?

Chartered is going to be the only way to differentiate.

report this

Paul Barnard

Nov 28, 2012 at 15:05

I got so fed up with solicitors' inability to refer that I started a separate will writing/LPA business, having trained and joined a suitable professional body. A real eye opener and one that will reap handsome rewards in future in terms of cross referrals.

report this

the elephant in the room

Nov 28, 2012 at 15:06

Why am I not surprised. SJP have clearly have friends in high places....

report this

Lawrence Cook

Nov 28, 2012 at 15:06

The requirement that the client has had an 'informed choice' from next year will require lawyers to show some due diligence rather than carry on with some cosy relationships. For an IFA (or other advisers) who have an attractive offering will see this as a good way to demonstrate their value to lawyers and their clients. Having a badge with Independent was never a guarantee of quality. Lawyers need financial planners more than ever, this story is a sideshow.

report this

James Clancy

Nov 28, 2012 at 15:10

Commonsense approach if you ask me.

There will be many qualified advisers either Certified or Chartered that will opt for the restricted route. Just having the "independent hat" doesn't mean their client better service, or will lose out and sound and good financial planning

Hopefully, solicitors will have a pragmatic approach by asking a number of advisers to make presentations.

Rather than take the easy route, as I've said before in just giving it to his mate in the rugby or golf club, or be impressed and seduced by companies that have large marketing budgets .

report this

Gillian Cardy

Nov 28, 2012 at 15:10

@Darren : Chartered will not be a differentiator when everyone at SJP or Towry has Chartered status - it's good but it's not the same as Independent.

And I'm not finished on this one yet.

P.S. I'm only £16.25 per month ;-)

report this

Neil Whitaker

Nov 28, 2012 at 15:11

So clearly the SRA has completely ignored the consultation response from the Law Society. I am sure the FSA did not intend this to happen when they re-defined the term independent.

report this

Lucian Camp

Nov 28, 2012 at 15:12

Can I draw Philby's attention to the last line of the article ("The board has backed option 3") and suggest that sloppy reading, not sloppy writing, is the problem here?

I guess on that basis it fits in pretty well with the stunningly sloppy spelling and punctuation in Eden's and Darren's comments, and the even sloppier thinking in Michael Brown's (if he thinks that he does any credit to the IFA sector by using such horrible language on a publicly-visible website, he is badly mistaken).

I must say, if I was a solicitor, just on the basis of these comments alone there are five IFAs who I wouldn't let within a mile of any of my clients.

report this

Susan Hill

Nov 28, 2012 at 15:14

Chartered will be the solution and referral of choice.

report this

James Hurdman

Nov 28, 2012 at 15:20

Advisers will still need to differentiate themselves from the competition whatever the rules on solicitor referrals are. However, I fear for some clients. For example, heard the story about a "partner" at an "Upmarket" sales force who brazenly suggested to the owner of an IFA company that he refer large investment cases to them from next year as "IFA's can't earn the money they used to as they can't justify it, whereas I still will and I can give you a cut". I kid you not. Shows you where some peoples heads are at. I am sure that that particular company will be very happy with this news.

report this

Mike Morley via mobile

Nov 28, 2012 at 15:22

@Lucian Camp - If you are going to be that picky I am sure you will have meant to say "If I were a solicitor....................."

report this

Michael Brown

Nov 28, 2012 at 15:25

@ Lucien

Thank you for your really crass comments.

Shame, as I have many solicitor connections who agree with my thoughts and not your ignorant ones.

Oh, to be so perfect in your little world.

report this

Julian Stevens

Nov 28, 2012 at 15:26

SJP is not restricted ~ it's tied (even though it tries to disguise the fact by way of its tie-up with an IFA firm in Glasgow for what I'd bet good money is a vanishly tiny number of referrals). On what basis the FSA allows this fudge to continue is quite beyond me. But then the FSA has created such an almighty bugger's muddle of smoke and mirrors in the wake of depolarisation that I suppose we shouldn't be surprised.

report this

j p

Nov 28, 2012 at 15:42

it is trully hard to believe that a profession that is involved in gaining redress for financial ills can support this approach. The problem they frankly have is that they may not have much of a view of the landscape yet.

report this

Keith Cobby

Nov 28, 2012 at 15:55

The 'independent' tag will surely pass into history.

report this

david mann

Nov 28, 2012 at 16:06

ANy professional will wish to refer to a Chartered adviser who is Independent - that is the gold standard and SJP et al will never achieve it.

@LucianCamp - your true colours are quite apparent and the fact that you are retained by SJP to write articles for them confirms your own lack of independence within this debate.

report this

James Clancy

Nov 28, 2012 at 16:15

@ Susan Hill

What makes you think that Chartered will be the solution and referral of choice?

What about those that have CFP or for that matter have both qualifications?

What makes you think Solicitors will go for Chartered?

Providing you have level 4 you and are regulated. You can display the confidence and experience that you can give sound advice I would say many solicitors will not be that bothered.

A STEPS qulification might hold more influence in solicitors recommending clients.

report this

Darren Lloyd Thomas

Nov 28, 2012 at 16:23

Oh Lucian you can spell! There's a clever boy!

What a shame that you completely missed the point - only to make your own crass comments.

Still, it would seem that most of the advisers on this particular blog are on to you - looks like the game is up for you old chap.

Go practise your spelling on some nice tied gold paper!

report this

Paul Barnard

Nov 28, 2012 at 16:52

OK, what percentage of your business currently comes from solicitor referred cases? Virtually every IFA I have ever spoken to tries to cosy up to the legal "profession" to try to get referrals, but they are generally few and far between. I may be wrong, if so, please tell me what the %s are. If I am right, does it actually matter in your business case?

It does matter in terms of the rights and wrongs of referring to other than IFAs, in my opinion, but it is an issue that could be resolved quite simply by asking the solicitor this question.

"You can now refer to a restricted adviser. Some tied advisers will claim to be restricted. You may be comfortable in referring to them in the knowledge that they are legally constrained from advising on all solutions available from the whole of market. You will have to do due diligence on them to check that the solutions they offer are compatible with your clients' needs. As a legal professional, you have no expertise in this area and no basis on which to make such a decision. Or you can refer to an independent financial adviser who will be bound both legally and within the terms of his professional body, to assess all suitable solutions"

report this

James Clancy

Nov 28, 2012 at 17:13

@ Paul

You are correct in my 32 years experience as a financial adviser I have had only two referrals. I have had plenty of promises referrals providing I passed them over conveyance work, or estate planning work.

Frankly I don't work like that I would only introduce a client to a solicitor whom I felt have the experience and expertise to complete the task required by the client.

Saying that, one of the introductions I was given was to help with a family trust worth in excess of £30 million.

While I was able to give some advice I declined in managing the portfolio,as I felt I didn't have the resources to do so

Saying that, I knew do now look after four of the beneficiaries of the trust on a personal basis.

report this

Glint Thrust via mobile

Nov 28, 2012 at 17:23


I doubt that you've ever finished.

report this

Richard SALTER

Nov 28, 2012 at 17:24

Another example of the FSAs incompetence. Now as a result of RDR clients cannot even rely on solicitors pointing them toward only independent financial advisers. Sants and his jolly bunch of meddlars should hand back their fat salaries and resign in shame.

report this

Eden W

Nov 28, 2012 at 17:24

@ Paul,

Thanks for pointing out, correctly, that my opinion is not about something that has ever made any difference to my business. It's just that I felt Industrial Branch Assurance was more of a social good than SJP or Towry and that the wrong one got regulated out (and priced out on an RIY basis - before anyone points that out) of business.

@Darren - cutting sarcasm - thanks!

@David Mann - can you prove that someone is blogging with an invisible PR hat on?

report this

ian muirhead

Nov 28, 2012 at 17:43

The decision is clearly perverse, though efforts to achieve a re-think will continue. However, the fact that the onus will be on solicitors to demonstrate due diligence in their choice of advisers, as a compliance requirement, will present a golden opportunity for advisers who are independent in the true sense of the word, i.e. being free from third party influence, to promote the superiority of conflict-free advice. Until now, the absence from most law firms of the management controls which are required by post-Legal Services Act regulation has permitted the multi-ties to slip under the radar.

report this

Usually found sitting on the fence

Nov 28, 2012 at 19:35

As an onlooker with little, if any, vested interest in this, I would perhaps like to offer 2 observations:

1 - Financial advice may be good or bad, whatever the advisor's status/label. So given that the legal profession presumably wish to maintain relationships with many of their wealthier (who can afford advice) clients, I doubt they will dump them on any old adviser independent, restricted or tied.

2 - This outcome opens up the legal profession to any number of claims against them. If they recommend a restricted adviser, who is later identified as making inappropriate investment choices and perhaps one which closes as a result, then after the FSCS pays their limits, who does the client persue for further losses? I think the legal bod that made the recommendation. Where at least if they pass it to an independent, the buck stops with the adviser and the adviser's regulator...

report this

James Clancy

Nov 28, 2012 at 19:42


Why do you think this decision is perverse . If so what part their decision is so wrong.

Surely a well qualified adviser to Certified or Chartered level, or even has a STEPS qualification

. Why should they not be able to form a relationship with a solicitors practice because they elects to go restricted .

report this

Ian Lees

Nov 29, 2012 at 07:11

I think this reduces the quality of solicitors and their services on offer. There are a great many salespeople out there . . . the direction by the FSA and their employers . . . has had the end in mind - withou giving thought to consumers. We are back to the " good ol' days " of the Pearl Prudential and Co Op ", sales people by design, excessive profits ( used to be 42p in every £ 1-00 for the door salesperson). There is much to be gained by sales and marketing companies - and as such it seems strange that TSB would wish to relenquishing their 49% stake in St James Place. However such a holding might show up how poor the direct sales are at TSB - even with their client bank - and their strategies for " shootin' fish in a barrel ". In my opinion the death of Independent advice, by being forced to go restricted is a mistake - and the cost of becoming Certified or Chartered or the STEPS qualification - will be further reduced by reducing the quality of the adviser - because he or she is " restricted".

I wonder of the number of Government Bonds andGilts and Fixed interest held by Scottish Widows Clerical Medical and Black Horse life held under LloydsTSB group - have any influence on such corruption of advice, and its status or grease the hands of MP's - to vote for resticted advice ?

report this

ian muirhead

Nov 29, 2012 at 07:56

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?

report this

Philip Melville

Nov 29, 2012 at 09:48

I suspect that if you are able to demonstrate that you can add value to the client it will not matter what you call yourself.

We and lawyers are part of an industry which serves the public and if we can be seen to be an asset to a business then we will be welcomed with open arms.

report this

Ian Lees

Nov 29, 2012 at 10:06

It seems bizarre that a solicitor will be " Independent " in one aspect of theri business and " restricted " in another. As a mere man - I will assume the lower of the two i.e restricted. Then I will look for a solicitor who is Truly Independent - which in my humble opinion will only serve to destroy the one area of Solicitors into more than one ( like the insurance industry Tied agents, restricted agents, restricted advisers and independent advisers. It seems strange that the old duffers at the SRA would even contemplate messing up with their industry - given that apparentlY Eddie Stobbart is going to drive a lorry through their cosy business along with a few American Law companies. It is getting all too strange for me. Who am I dealing with ? a selection of subterranean advisers from various backgrounds with various degrees of knowledge from the CII the IFP or pfs diploma - or AIFA or the new breed of Independent advisers. Cost is not the issue - credibility and integrity is the issues. If solicitors wish to dilute their services - then let them. We have seen the deposts at teh FSA destroy Independent Financial Advice - and restricted for that matter - becasue the cost of regulation is extraordinarily high - in time and money - and given the FSA cannot regulate for fear of giving offence ( rather than a fence for the insurance company directors to sit on ) it has done nothing to serve the voting public - the consumer - and has restricted competition in the market

report this


Nov 29, 2012 at 10:11

@ Ian Muirhead

Succinct point well made.

I reckon from 1/1/13 onwards 90%+ of end user advice from a so-called Independent will be exactly the same as a "Restricted" (FSA Definition) whole of market adviser...... but without the latest newly introduced regulatory nonesense which I also reckon will be repealed in a year or two anyway and yet another "code of practice" introduced.

Also, perhaps it would be easier if we ceased to equate Restricted with Tied. It seems to me there's a very significant difference between the two and grouping them together does nothing for this argument/discussion.

report this

Ian Lees

Nov 29, 2012 at 19:02

I thought " restricted " meant just that ! restricted to limitations whether restictions to trade or a restricted area - we would not say we have a restricted area - but is " open market ". Restrictions and being restricted - such as restrictions to trade demonstrate the limitations placed on these restictions - like restrictive trade practices . . . . when one is independent one is not restricited and neither is one beholding to their master in which ever guise . . or conflating of their position. Restictions and restrictive trade practices under a master and servant relationship ( HMRC Rules ) - rather than independent and not subject to inside or his masters . . . influence .

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Opportunities emerge as production moves back home

As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

A spotlight on Alastair Mundy

Alastair Mundy met Citywire's Daniel Grote at the London Stock Exchange Studios for a detailed interview about the Investec Cautious Managed fund.

More about this article:


Sorry, this link is not
quite ready yet