While some might expect the IFA community to react angrily to the news solicitors are to be allowed to refer to non-independent financial advisers, it is actually solicitors themselves who are angry and many will likely continue to hold an independent bias, according to one solicitor-IFA.
Earlier this week the Solicitors Regulation Authority said that it had weighed feedback from its consultation and was recommending to its board that solicitors be allowed more freedom in deciding which advisers to refer clients to.
The primary reason given for the change is the Retail Distribution Review, the definitions of which would mean many currently independent advisers are categorised as ‘restricted’.
Yesterday, the board officially approved the policy change. It is not yet official as the policy still needs to be approved by the Legal Services Board, the overarching regulator for legal services in the UK, but most expect that will be little more than a formality.
Duncan Philp, senior consultant at IFA Macbeth Currie, which is attached to a solicitor firm of its own, said it isn’t the advisers he works with who are unhappy with the change, but the solicitors are.
He said: “[The solicitors] are not very happy now. They feel that in order for their clients to be given the best advice that you have to be someone who is independent. They feel the independents will always give clients a better business acumen.”
The Law Society also indicated its opposition to the proposals, issuing a statement urging solicitors to “disregard the liberalisation of the handbook in this area and continue to only recommend IFAs”.
Other advisers have protested that giving solicitors this ability will be akin to letting them give financial advice as restricted advisers are not ‘whole of market’, but many have hailed the move as “common sense”.
David Barnett, financial adviser at DPB Independent Financial Services, said: “To a degree it’s common sense. What’s absolutely ridiculous now is because of the RDR there are eight different types of advisers. How the public is going to find clarity in this situation I don’t know.
“As long as the person they are referring is aware of the situation they won’t have a problem. It’s a sensible way forward and illustrates the stupidity of the situation. If the solicitors themselves or the adviser explains to the client and the client is happy, what’s the difference?”
Andrew Reeves, founder and director of The Investment Coach advice firm, says the news means solicitors will have to be more careful than before when referring clients and will have to conduct more rigorous due diligence. However, he said the new rules do not compromise client interests.
