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Home > Regulation > RDR News & Analysis

Solicitors regulator launches referrals consultation

Regulatory body calls for feedback on three possible options for referrals post-RDR as it considers loosening rules.

By Michael Trudeau | Published Jul 31, 2012 | comments

The Solicitors’ Regulation Authority has formally launched its consultation on referrals and called for feedback from members of the industry.

With the countdown on until the Retail Distribution Review takes effect, the SRA is considering whether the Financial Services Authority’s post-RDR definition of independence is still practical for solicitor referrals.

In a statement, the SRA said that under the RDR, many firms currently labelled independent may lose the title because they will not, for example, advise on a sufficiently broad product range.

Under the SRA’s current policy, solicitors can only refer clients to independent advisers. Therefore, the body is contemplating widening its net to allow referrals to non-independent advisers post-RDR.

Three options being considered by the SRA are:

• change the wording to remove reference to “independent intermediary” and replace it with with corresponding wording from the Retail Distribution Review;

• remove the passage in question and replace it with a passage describing referral to an independent adviser; or

• change passage to give clients the option to make informed decisions about referrals in respect of investment advice.

Agnieszka Scott, financial regulation policy manager at the SRA, said: “In outcomes-focused regulation, the solicitor should make a judgement as to what is in the best interest of the client.

“Changes in the financial market and the definition of advisers means an adviser could not be classed as independent but still provide the client with the relevant choice of financial options.

“Solicitors, as highly qualified professionals, should be free to assess and discuss clients’ needs, not be restricted by a prescriptive rule. It’s one of the reasons that we’re consulting on three options available to us and we’d like as many people as possible to provide their views to us.”

The consultation will close 10 September 2012.

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