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By Michael Trudeau | Published Jul 03, 2012

Solicitors’ regulator reveals plans for restricted referrals

The Solicitors Regulation Authority is consulting on changing its requirement for solicitors to refer clients only to independent financial advisers and has made public documents outlining the arguments for and against and several possible options for alterations.

In a consultation paper, the SRA argues that the language used in its handbook referring to independent intermediaries is out of date. It also argues that the requirement “pre-empts the solicitor’s own judgement”.

The paper says: “The FSA’s Retail Distribution Review is intended to create the situation where the difference between independent and restricted advice is more clearly stated and clients will be well informed about the different types of advice which they will receive and that the choice will be well informed.

“Use of the description independent intermediary, which is a historic term inherited from previous versions of the conduct requirements, does not clarify the position.”

Several options are outlined in the consultation paper, including a rewording the SRA handbook to remove reference to “independent intermediary” and replace it with wording reflecting the new FSA terminology.

Another option suggests removing that section altogether and leaving the decision up to solicitors themselves based on other sections in the trade body’s handbook.

A third option calls for the solicitor to work with the client such that the client clearly understands the nature of the financial adviser, the law firm’s relationship with them and other relevant information.

The paper says: “This would give the client a general understanding of the potential restrictions or otherwise which may result from the recommendation and be placed in a well-informed position and be able to give their informed consent.”

This final option would allow the client and lawyer to work together to determine if an independent or restricted adviser would be the more suitable choice, the paper adds.

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