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SRA allows referrals to ‘any’ adviser in handbook change

The Solicitors Regulation Authority has amended its handbook to allow solicitors to refer clients needing financial advice to “any financial adviser”, removing the previous prescription that referrals must be to IFAs and placing full responsibility in the hands of referring solicitors.

The handbook went live on 1 January and includes a change to the code of conduct allowing solicitors to refer to the financial adviser that offers the “best outcome for the client”.

Previously, solicitors have only been allowed to refer to financial advisers deemed independent by the Financial Services Authority. The change is designed to reflect the reality of changes to FSA definitions, which could prompt many currently independent advisers to go restricted.

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Many had expected that the move would include wording to focus on advisers that are still ‘whole of market’, but the SRA has resisted this and instead placed responsibility for choosing a suitable adviser wholly in the hands of solicitors themselves.

The SRA’s decision to change its referral rules has proved controversial since it was first put to consultation last summer.

In November 2012, after the SRA board approved the proposals, a row erupted between the regulator and The Law Society, which advised its members to ignore the guidance from the SRA and continue to only refer to IFAs.

However, earlier this month The Law Society indicated that it will drop its opposition to solicitor members referring clients to non-independent advisers as it prepares to publish fresh guidance on the issue that focuses on the ‘impartiality’ of the intermediary.

The move came just a day after Sifa had also altered its stance after the body had also initially sounded strong opposition to the SRA proposals, with the body rebranding its initialism from ‘Supporting Impartial Professional Advisers’ and opening its doors to ‘whole of market’ restricted advisers.

Agnieszka Scott, director of strategy and policy at the SRA, said: “The amendment has been brought in to remove any barriers solicitors may face when trying to achieve the best outcome for their client. Doing away with the prescriptive rule about what kind of financial adviser should be referred to achieves this aim.

“It needs to be reiterated that we are not making a judgement on who provides the best financial advice - independent advisers or otherwise - which is what a lot of people who responded to the consultation did. We have simply removed an administrative blockage, allowing the solicitor to make a considered judgement on what’s best for their client.”

The Financial Services Consumer Panel said in its response: “We support consumer choice and think it entirely right that the client should be provided with sufficient information to make a decision on the type of advice service that would meet his/her needs, rather than automatically being referred to an independent financial adviser.

“This is particularly important given the potential cost of independent financial advice and the availability of possibly more appropriate and cost-effective advice services, such as restricted advice.”