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St James's Place welcomes SRA restricted referrals decision

by Jun Merrett on Nov 28, 2012 at 15:21

St James's Place welcomes SRA restricted referrals decision

Tied advice force St James's Place (SJP) has welcomed the Solicitor Regulation Authority's (SRA) decision to allow solicitors to make referrals to restricted advisers.

The SRA board to agreed the SRA's recommendation that solicitors should no longer make referrals to independent financial advisers only.

The board's decision will allow solicitors to refer clients to restricted firms like St James's Place when they could not before.

David Bellamy (pictured), SJP chief executive, said: ‘We welcome the decision by the Solicitors’ Regulation Authority as we believe one of the clear benefits of the retail distribution review is that it ensures a higher minimum standard of professional qualification across the industry.

'The improved professional standing of all financial advisers should allow the focus to shift away from the status of the adviser, to the thing that matters most for clients - the quality of the advice that they receive. We also believe that solicitors should be allowed the professional judgement and freedom to decide what is in the best interests of their clients.'

However Ian Muirhead, chairman of solicitor and IFA professional body Sifa, said the decision had exposed solicitors to unsuitable advice.

'We think the decision is highly regrettable as it exposes solicitors and clients to unsuitable advice with repercussions for the solicitors’ compensation fund. If all and sundry conflicted financial advisers being able to knock on solicitors’ doors saying you have to deal with us, solicitors will be in no position to judge horse flesh.

'The upside is that solicitors will be required by the rule to come to an informed decision in conjunction with their clients, so they need to convince themselves they’re doing the right thing. So this whole issue becomes a compliance issue.

'We have a great opportunity to assist independent firms to say why independence is so much better. The fact that our directory of professional financial advisers is endorsed by the Law Society will give us a great fillip and provide reassurance to solicitors. So there is daylight there.'

31 comments so far. Why not have your say?

Phillip H

Nov 28, 2012 at 15:42


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Mark Ring

Nov 28, 2012 at 15:45

... and next weeks news headline will be : Breaking News - The Pope IS Catholic

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Nov 28, 2012 at 15:53

"The improved professional standing of all financial advisers should allow the focus to shift away from the status of the adviser, to the thing that matters most for clients - the quality of the advice that they receive" - Correct

In reality, "the thing that matters the most" to SJP etc, is the amount of funds shoveled into their Model Portfolios.... Great Advice! A very poor decision from the SRA. One that in time will come back to bite them via the potential for miss selling of Products.

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Julian Stevens

Nov 28, 2012 at 15:54

Is there not a glaring inconsistency in this report? Paragraph 1 refers to SJP as tied, yet paragraph 3 refers to it as restricted. Have the two, in the mind of CityWire, somehow become interchangeable? If so, there appears to be a chasm the size of the Grand Canyon between your understanding of the two terms and mine.

Still, never mind, the FSA's happy with SJP's business model and how it presents itself, so there's nothing to worry about, right?

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Nov 28, 2012 at 15:54

It's like RDR for Solicitors, this should show who truly looks after their clients best interests !

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Nov 28, 2012 at 15:58

@JKFAY - Whilst I don't disagree with your comments, it's the solicitors themselves that, in many cases, will become liable. How many solicitors do think know how to analyse portfolio charges & performance?

Unless they can prove the correct due dilligence has been done then they are wide open to being sued once the clients find out what they've got. Although I have to say that's the same issue whoever they refer to!

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Nov 28, 2012 at 16:01


"shift away from the status of the adviser, to the thing that matters most for clients - the quality of the advice that they receive. We also believe that solicitors should be allowed the professional judgement and freedom to decide what is in the best interests of their clients"

Therefore if you really believe you will offer a client an informed and expansive choice of advice been tied to us is the best thing since we achieved sliced bread. Bloomer heck.

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Nov 28, 2012 at 16:06

@Gareth - I see your point. I guess it's up to solicitors to make their own bed!

Not entirely sure what type of service they are offering to their own clients, if they are happy to refer them to "tied" "Advisers"

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John Burchett

Nov 28, 2012 at 16:08

It is the best outcome for the client that is important and this cannot be acheived through SJP. They clearly acknowledge this by the weak argument they have put forward.

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Confused 2

Nov 28, 2012 at 16:09

Be afraid be very afraid!!!

Unless you offer clients a great service, good advice, quality well researched products - then let all and sundry get on with it!!

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David Curley Dip extrodinaire

Nov 28, 2012 at 16:10

How quick will SJP be in creating a Due Diligence pack for Solicitors to put on their shelves ready for the next compliance visit, I reckon they already have it at the printers.

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Nov 28, 2012 at 16:12

Why would a solicitor be sued if the adviser they recommended did a poor job, restricted or otherwise? Surely they are admitting their profession does not include financial advice, and just referring to a profession that does.

The logical conclusion would be that if I referred a client to a solicitor for a will, and they fouled it up, then I am liable in some way for redress? Surely not, or am I mega naive?

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Nov 28, 2012 at 16:13

@JKFAY - Problem is, they don't know / believe they're tied. Every solicitor I've ever spoken to thinks SJP are independent in all but name.

Following that logic through, it would be interesting to see how some SJP partners explain their delight at solicitors being able to refer to restricted advisers, where they thought they were independent all along!

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Phillip H

Nov 28, 2012 at 16:16

2 things. 1. Why are SJP welcoming the decision if they have (allegedly) been accepting referrals from solicitors for the past 500 years? Surely it should make no difference.

2. The solicitor now has to understand what is right for the client before he can refer to a restricted adviser. A resticted adviser in the new world means not only a restricted range of products but also includes tied. Imagine a solicitor who refers a low risk client to a restricted and tied adviser who is only able to advise on high risk products (and to make it worse from one provider as they are also tied). The solicitor wouldn't necessarily know that the adviser is inappropriate (how can they unless they know what the client should do in which case they would be advising) and the client woudl end up getting royally shafted.

If I was a solicitor and I understood these new rules I would be far more inclined more than ever to refer to an independent financial adviser as this is the best way of ensuring I don't get my ar*e sued.

Ironically, I think this is an opportunity for the IFA and a risk to the likes of SJP...Lets educate solicitors about the new rules!!!

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Nov 28, 2012 at 16:22

I thought the SRA had got their heads around SJP and it's non Independant(ness).... Saw a publication a few months back.

Clearly not.

@ Phillip H - I actually agree, this could be positive for IFA's... "So Mr Client, I'm going to refer you to an adviser who cannot give you independant or holistic financial planning.... Oh."

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Julian Stevens

Nov 28, 2012 at 16:27

One wonders whether or not any solictors are reading these comments and, if so, what they make of them.

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Nov 28, 2012 at 16:36

@Julian Stevens - As I was reading your comment I came across this on the Law Gazette website.


So I guess the answer is, yes!

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Neil Chamberlain

Nov 28, 2012 at 16:45

Perhaps the legal profession should have a go at giving restricted advice to their clients. We do law suits but not up to trial so you are on your own after that! It might not go down so well only offering a bit of what is available as a a solution for their clients. Hmmm....

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Confused 2

Nov 28, 2012 at 16:51

Gareth,if you read the article you will note it is Ian Muirhead that is making the comments - no self interest there???

Who would a Solicitor prefer to refer to? :-

1. A national company with a national reputation, a guarantee and a robust compliance process and investment process

2. A cornershop, sometimes mortgage broker, who once a year does some investment business - but hes independent ?

Thats how most solicitors see many IFA's.

The quality adviser - whether restricted or tied should flourish, so if you have a good relationship with a Solicitor then have no fear from any other adviser, whether SJP or IFA.

Lets stop bickering and get on with dealing with our clients!!

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Nov 28, 2012 at 16:59

Confused2 - Point taken (and well made) about SIFA, however the comments make interesting reading, which I guess is the point I was trying to make.

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Glint Thrust via mobile

Nov 28, 2012 at 17:16

Most contributors are missing the point.To solicitors,it's all about who is still likely to be in business,regardless of restricted or 'independent' status,in 5 or 10 or 15 years time,against whom to claim,if things go wrong.

Sadly,but possibly correctly,they have concluded that the answer to that is SJP.

Given the relentless bad press(do I really need to list them)associated with the IFA status,this is hardly surprising.

If we had spent less time infighting,slagging SJP and whinging like spivvy school kids,neither RDR,or this decision would be happening.

Nonexistent Brazillian rainforest shares or Cypriot property Sipp investment,anyone?

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Julian Stevens

Nov 28, 2012 at 17:17

I've just read the article and, as you might expect, the key text that caught my eye is "solicitors will be permitted to send legal services consumers to advisers who may be tied into offering a particular financial product".

So the lines between independent, WoM, restricted, tied and all the other muddy variants really do seem to have become so blurred that the SRA no longer understands the significance of the differences between them all and CityWire seems unable to produce an accurate or at least clear report. Is that not the sorriest of indictments against what's come to pass in the wake of depolarisation?

Is nobody but IFA's and/or those opting for restricted status (because they don't wish to advise on certain things that the vast majority of IFA's, as we are today, don't advise on anyway) able to see the differences any more?

Is the FSA really happy with an organisation that's neither fish nor fowl and which commonly allows its true status to be misunderstood? Is this what the FSA charges the industry hundreds of millions of pounds a year for whilst at the same time banging on relentlessly about the need for clarity and transparency? We certainly have neither of those things in todays' depolarised market place, do we?

I have no objections to SJP in principle and nor am I envious of its success. But what does irk me is how it seems perennially to be allowed to get away with misrepresentation of its true status and priorities which, as somebody else has already posted, are to shovel as much client money as possible into its own products and portfolios. Its agents are clearly targetted to do exactly that.

It would be interesting to see a copy of SJP's terms and conditions for the engagement of new partners and what, if anything, they say about what will be expected in terms of how much client money is shovelled into SJP's own portfolios and products. Or are such matters all kept verbal and strictly off the record?

One wonders what would happen if somebody became an SJP partner but then directed most of his business via that IFA firm in Glasgow because he really did feel that the SJP options were inferior and was prepared to earn less per sale to stand by his convictions?

And that he wasn't prepared to churn all his pre-SJP clients' investments into SJP portfolios and products because he could see no reasonable justification for so doing?

One can imagine that he probably wouldn't last very long. But hey, I may be entirely wrong and my questions and comments entirely without merit or foundation. The SJP set-up may in fact be the very bastion of integrity and doing what's really best or its clients. It's just that from what I've heard and seen and read on so many occasions in so many places from so many different sources that I rather strongly suspect that SJP's principal raison d'etre is the benefit of SJP,

Perhaps an ex-SJP partner might care to come forward and set the record straight.

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Michael Shea

Nov 28, 2012 at 17:31

Actual past investment performance cannot be used as a criterion for selecting a fund (no guarantee for the future). That leaves management charges, product design and risk profile as criteria. Presumably, in the absence of investment performance, the best product to recommend is the one with the lowest charges that matches the risk profile, unless a substantial demonstrable difference in product design exists that might be advantageous to the client (are there many of those?) It seems to me that there is an oversupply of investment choice and that a) some investment houses will close and b) providers will seize control of their distribution by setting up their own sales forces (deja view) who can advise holistically on the majority of clients' needs. The top 10% of household incomes for a couple with no children in the UK starts at £46,000 after tax per annum (Guardian 22nd June 2012) - that could be a husband on £30,000 gross and a wife on £30,000 gross, not a lot left after mortgages etc. They won't be fussed about having a selection of thousands of funds to choose from, unless they've inherited from mum or dad, and they'll go by the personal relationship with the adviser, regardless of the status of the adviser. Or they'll go with an adviser they can afford. That's real life.

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Michael Shea

Nov 28, 2012 at 17:37

I wrote mine while Julian Stevens was writing his. For the record, I am not an SJP adviser, in fact I'm not an adviser of any persuasion.

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Keith Cobby

Nov 28, 2012 at 18:37

I think Michael Shea put it rather well. I have always believed that what people need is good advice not the 'best advice' at that moment. The man from the Pru provided a generally good service. and I am sure that SJP do the same for their clients.

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Nov 28, 2012 at 18:46


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Nov 28, 2012 at 18:51

Alex01 - @ Keith - you are probably right but as yet I have to meet one - I have come across dozens at Networking events - even been to a seminar - one of my ex Direct Sales (with one of the firms who works closely with IFA's so the products are not limited) colleagues went to them and he told me he bought his lovely BMW through the commission he earnt moving bonds from them across to SJP so he could service them. I was shocked

Now I have not worked for SJP but can they service an investment with any provider or are they locked out

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Julian Stevens

Nov 28, 2012 at 18:54

To Keith Cobby ~ From the many, many posts on CityWire and other places, by a wide variety of people, a mountain of anecdotal evidence exists to suggest that SJP partners commonly don't ~ churning, excessive commissions, flogging onshore instead of offshore Investment Bonds, poor fund selection, lack of regular reviews. The list is long. But never mind, the FSA seems happy, and that's what really matters.

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l'ifa passeport en provenance de France

Nov 29, 2012 at 09:25

I need a telephone number for theSJP sales manager, thats commision they can still take post RDR , the FSA love them , i can churn all my clients into their well managed funds and now the local brief will give me his punters

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Ric Green

Nov 29, 2012 at 11:07

What do SIFA think about members of Sandringham Financial Partners receiving referrals from solicitors?

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Nov 29, 2012 at 18:05

Calm down dear it all comes to those that wait

I'm sure the people currently putting pen to paper are the Solicitors P I insurers who are creating a few more detailed questions in readiness for their next P I application renewal pack - increased excesses, exclusions, self insure, will it all be worth the potential increased liability?

I think i can see them writing question number 1, does it say...

'In your own words please state why you disagree with the Law Society considered opinion that this will create an increase in missselling and negligence claims

We aren't in any rush, we can wait

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