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Axa Wealth welcomes easing of SRA referral rules

A proposal by the Solicitors Regulation Authority, on changing its requirement for solicitors to refer clients only to IFAs, has been welcomed by the head of business consultancy for Axa Wealth.

By Kevin White | Published Jul 18, 2012 | comments

Gary Thomson said the proposals, which could see solicitors refer clients to restricted advisers, offered a “common sense approach for introducers”.

Under current regulations, solicitors are restricted to referring business to FSA-regulated independent advisers only. A SRA consultation paper argues that with the onset of RDR, the language used within its handbook that refers to “independent intermediaries” is out of date.

Options for a reform to SRA policy include rewording the SRA handbook, and replacing the term “independent” with something more appropriate to the post-RDR advisory landscape, removing the regulation altogether and leaving the decision up to solicitors themselves based on other regulations within the SRA handbook, or calling for the solicitor to work with the client so that they clearly understand the nature of the financial adviser, the law firm’s relationship with them and other relevant information.

This change could potentially lead to solicitors being allowed to refer clients to restricted advisers.

Mr Thomson said: “The restriction on referring to independent advisers only was never a guarantee that the client would receive a good service and was more of a legacy rule to avoid clients being referred to single-tie advisers.

“It’s my view that, as long as suitability is being demonstrated, the most important consideration for an introducer is the level of service that the client receives and post-RDR, where remuneration is agreed with the client; this seems to reinforce that view.

“Restricted advisers can help introducers with their due diligence by providing clarity around the level and quality of service the client can expect and the nature of the restriction or area of specialism within which they operate.”

Dean Smith, director of Bristol-based My IFA Friend, said: “For me, if you are looking for a benchmark, especially post-RDR, the IFA is the gold standard.

“But some restricted advisers will be equally competent and highly qualified in their field so a review of the regulations could be a good thing. We all need to be qualified to a minimum of QCF level four from January.

“Ultimately though, it’s about giving the client good advice. I believe in a free and fair market, but personally as an independent adviser I wouldn’t want to restrict the choices available to a client.

“We are all professionals. Whether you are restricted or independent, your duty is to impart that level of knowledge to a client.”

Results from the consultation will be made public by September, the SRA said.

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