PFS warning over solicitor referrals
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Advisers will have to maintain their independent status if they gain clients through solicitor referrals, says the Personal Finance Society.
The Solicitors Regulation Authority requires solicitors to refer clients to an IFA for investment advice.
Speaking on the Aurora at the PIMS conference last week, PFS chief executive Fay Goddard said: “So far, there is no indication of any change in the SRA’s stance and businesses that have relationships servicing referred clients are going to have to focus on ensuring they maintain the independent tag.”
Sifa, the representative body for solicitor IFAs, says that the SRA has not consulted on what would happen to legacy referrals if an adviser changes from an independent to a restricted model.
Managing director Ian Muirhead says: “It is a cardinal rule of the solicitors’ profession that they must maintain independence in all respects. There is no reason why that would change. The question, however, of leg-acy relationships is one that has not been touched on.
“I suspect that there will be a reappraisal of IFA relationships after 2012.”
In February, Sifa warned that solicitors are continuing to refer clients to St James’s Place advisers. SJP responded by calling on the SRA to rethink its stance on whether solicitors can refer clients to restricted advisers.
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Readers' comments (3)
Exasperated Me | 26 May 2011 9:28 am
How do you explain this to solicitors who introduce to SJP?
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Adam Smith | 26 May 2011 9:42 am
"In February, Sifa warned that solicitors are continuing to refer clients to St James’s Place advisers."
This really is easy to tackle with some joined-up thinking:
1. FSA uses section 165 powers (if necessary) to get SJP to identify referrals from solicitors.
2. FSA passes list of refrring solicitors to SRA.
3. SRA does something useful and hopefully sufficiently deterrent to stop the problem happening in future.
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Monsieur Reynard | 26 May 2011 1:10 pm
The lexicon for financial services needs to change. The SRA's rules are not clear. Post - RDR it will be possible for an authorised intermediary to offer a range of advice options, including both restricted and independent. You can actually do this now if you so choose.
I think the SRA requires a solicitor to refer to an intermediary who offers an independent advice option. The Industry needs to get used to the concept that intermediaries in the future can't just be described by one type of advice that they may offer.
We have so much to thank the FSA for.......
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