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Is independent label meaningless after SRA referral call?

by Danielle Levy on Dec 12, 2012 at 07:00

Is independent label meaningless after SRA referral call?

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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5 comments so far. Why not have your say?

Alan Steel

Dec 12, 2012 at 09:51

This is a cop out by these quasi regulators who haven't given a monkeys in the past about referring clients of so called prof firms to genuine independents but instead recommending their chums the stockbrokers whose model has been broken since the CGT changes 31 yrs ago . But hey what did we expect from a RDR obsession that's a dog's dinner .

So best for me to just sit on the fence .

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Keith Cobby

Dec 12, 2012 at 10:51


Dec 12, 2012 at 15:26

It is getting frustrating that there seems to be such an assumption that 'restricted' is necessarily inferior. Under the new regime, an adviser can and will be 'restricted' if a choice has been made to specialise in a particular area of advice, which might be pension drawdown, inheritance tax planning or investment management (as per the article) to name but three. In my opinion, there is every possibility that advice on such specific areas might well be superior from a 'restricted' adviser due to their specialist knowledge and experience compared with that available from an 'independent' financial planner. If it wasn't such an obvious cliche I'd talk abut GPs and specialists in the medical field. There, I've done it. It depends what advice is being sought as to whether 'restricted' or 'independent' will be better, but it is surely time to stop this lazy attitude to 'restricted' advice.

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Dec 14, 2012 at 14:45

Restricted or Independent?

If the Law Society is now in debate with SRA on the definitions of what this all really means how long will it be before the FCA PRA APCIMS CISI Treasury Self Select, MP's from all sides, BofE, the Treasury,etc and Uncle John Cobbly have a jolly good ol' scrap over this? Dogs dinner? I should say so and there are only a few weeks left before this nonsense supposedly goes live. If everyone in the industry (bar those with vested interests) are confused by these RDR (re)definitions then what chance do the public have? It's a countdown to a monstrous crisis.

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Dec 19, 2012 at 10:30

@JD It is not that 'restricted' is inferior - the suggestion on the contrary is that the descriptor 'independent' has no value/is a spoiled brand/ is not worth the candle as the FSA has tilted the playing field.

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