Advisers back Sifa, Law Society on independence climbdown
Although changes could damage IFA business FSA’s redefinition does not reflect nature of business, advisers argue.
Advisers have spoken out in support of moves by Sifa and the Law Society to step back from their vehement opposition to non-independent advisers and endorse ‘whole-of-market’ restricted advisers as members, agreeing that ‘impartiality’ is key to clients’ interests.
This week (2 January), professional body Sifa confirmed it was rebranding itself from “Solicitors Independent Financial Advice” to “Supporting Impartial Financial Advice”, thereby opening the doors for whole-of-market restricted advisers to join as members.
The following day, the Law Society confirmed to FTAdviser that it was relaxing its guidance to solicitor members and will therefore endorse referrals to non-independent advisers where they are sufficiently ‘impartial’.
This follows a decision by the Solicitors’ Regulation Authority to allow lawyers to refer clients to non-independent advisers post-Retail Distribution Review.
At the time of the SFA’s announcement, both Sifa and the Law Society spoke out vociferously against the plans, with the latter urging solicitors to “ignore the liberalisation of the handbook in this area” and continue referring clients only to IFAs.
Speaking to FTAdviser, several advisers sounded approval for the climbdown, agreeing that the focus should be on impartiality rather than the scope of the product range covered.
Alan Dick, partner at Forty Two Wealth Management, said he would prefer if independent remained the gold standard but agreed that the FSA’s definition does not match the true meaning of the word.
He said: “I think the issue for lawyers and accountants is there is going to be a move from saying independent takes the risk away from the lawyer. They would have to carry out more due diligence themselves so they might well end up referring to independent anyway.
“The ones that have been happy with advisers that [will now be classified as] restricted will continue to use them.
“I would tend to go with the lawyers in that I think the FSA’s definition is bonkers. Everything about it focuses on product sale; it should be focusing on advice.
Paul Scott, senior financial adviser at Scott Financial, which has itself moved restricted, said: “I wouldn’t say that most bodies understand the true meaning of the word [independent].
“If we skip on a year from now there will be a large number of ‘multi-tied’ in the market [that] will title themselves restricted... it should be independence of advice where the client isn’t told what to think.
“If the adviser is qualified and independent of influence from networks or banks then as long as he is not tied he is going to be as good as an IFA for me.
David Barnett, financial adviser at DPB Independent Financial Services, said: “Financial advisers who can’t qualify strictly as independent but are restricted would still be able to provide a reasonable independent service to clients.
“This is a typical consequence of the stupidity of the regulations imposed by the FSA. We now have eight different types of adviser instead of independent, tied and multi-tied.”
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