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Is independent label meaningless after SRA referral call?
by Danielle Levy on Dec 12, 2012 at 07:00
The Solicitors Regulation Authority’s (SRA) decision to allow referrals to restricted advisers following the retail distribution review (RDR) has left many firms feeling vindicated in not changing to comply with the standard.
Questions remain over how firms can distinguish themselves in an industry that is dominated by restricted businesses, however.
Under RDR rules, private client investment companies that do not offer life policies and pensions will not be able to describe themselves as independent.
Similarly, firms that use models and internal multi-asset funds, and do not cover all retail investments, may also struggle to meet requirements.
A large number of wealth management companies have said they will be restricted, including national firms such as Brewin Dolphin, Quilter, Rathbones, Brooks Macdonald and Close Brothers Asset Management. Cazenove will be independent.
The SRA’s decision to allow referrals to ‘restricted’ advisers follows a similar decision by the Institute of Chartered Accountants in England and Wales (ICAEW).
Simon Lough (pictured), chief executive at Heartwood – which will be restricted post-RDR as it has an internal multi-asset fund range – welcomed the SRA’s decision. ‘This is exactly the view I took when I became CEO three years ago,’ he said. ‘I looked at this and felt it was not going to benefit our clients to be independent.’
While Lough is very positive about the principles underpinning the RDR – not least improved transparency and the removal of trail commission – he believes the FSA’s decision to change the basis of independence could prove a mistake as it is confusing for consumers.
Soundings from FCA
Nonetheless, he was encouraged by comments that Martin Wheatley, chief executive of the incoming Financial Conduct Authority, made at a recent conference, telling investment managers they should not fear being restricted as clients would be aware of the services they require.
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