Accountants trade body: No change to referral rules post-RDR

The Institute of Chartered Accountants in England and Wales has stated that it will not be changing its rules on referrals in the wake of the Retail Distribution Review, as accountants can already refer clients to non-independent advisers.

In an update posted on its website, ICAEW stated that it plans to update its terminology to reflect the new RDR definitions of restricted and independent advice, but that this represents an extension of the current rules and not a broadening of referral criteria.

As it stands now, the ICAEW code of ethics demands that accountants refer to advisers that offer “objective” and wide-ranging advice.

The code states that single-tied advisers will likely not be able to offer such advice, but that multi-tied advisers may well be suitable for referrals as long as the accountant checks that the clients needs will be met.

The ICAEW says this responsibility includes “making an assessment that the restricted adviser has demonstrated that they are able to cover a large majority of the products and providers available in the market that is relevant to the client’s needs”.

Earlier this week the Solicitors Regulation Authority revealed it is consulting on plans to allow members to refer clients to restricted advisers, whereas now the body only allows referrals to IFAs.

The ICEAW statement says: “Advisers who fall within the FSA’s new definition of independent would, as before, be considered to be likely to be able to offer objective advice.

“Advisers offering restricted advice (which is everyone that does not fall within the definition of independent) would, as before, need to demonstrate their independence to referring members.

“They then need to be assessed by the member with the potential referral, to ascertain if they place business with the product providers that cover ‘a large majority of the relevant market, or offer the sector of the market which is most suitable for the client’s needs’.”