SJP calls for rethink over solicitor referrals
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St James’s Place has called on the Solicitors Regulation Authority to rethink its stance on whether solicitors can refer clients to restricted advisers.
The SRA currently requires solicitors to only refer clients to an IFA for investment advice. Sifa, the representative body for solicitor IFAs, recently warned that solicitors are continuing to refer clients to St James’s Place advisers.
In August 2009, SJP was forced to issue new guidance to its member firms after the SRA clarified that referrals by solicitors for investment advice can only be made to IFAs.
SJP chief executive David Bellamy argues the concept of restricted advice is becoming more accepted and that the SRA should reconsider its position on independent referrals.
He notes that a number of industry commentators have suggested many IFAs may find themselves in the restricted space post-2012.
Bellamy says: “I think most of the industry is beginning to realise that you have to bring some constraint around your operation. You may select from the whole market and create your own panels, and if that means you call yourself restricted so be it.
“I think the pace of the thought process that is developing [around restricted advice] should and ought to encourage the SRA to say, ‘look we are living in a world where independence is not what we thought it was years ago’.
“The restricted space is one where the majority of the industry sits and therefore the SRA should talk about ensuring that clients are introduced to qualified advisers that have the right backing and solvency. That is what is important, not whether an adviser is IFA or tied.”
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Readers' comments (19)
Incompetent Regulators Awards Team | 23 Feb 2011 4:31 pm
Goes to show regulations don't work. It all depends on who you know and not what you know!!!!
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Anonymous | 23 Feb 2011 4:32 pm
I think "cake" and "eat it" springs to mind. If you want the efficiencies offered by restricted advice, you have to expect a trade off and referrals from solicitors appears to be that trade. If you dont like it, don't join SJP.
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Peter Davies @ Create Wealth | 23 Feb 2011 4:37 pm
SJP, you just arent whole of market, plain and simple. The whole point of a solicitor referring to an IFA is to ensure that the client can receive advice that isn't restricted. SJP, your advice is restricted; it is restricted to your own products which in some cases no doubt may not be the most appropriate for the client. You are a well organised, slick sales driven firm SJP but like most others you have your limitations. You can't call a square round SJP!
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Anonymous | 23 Feb 2011 4:37 pm
Well SJP would say that wouldn't they !
There are plenty of IFAs around to pick up business that might become available from solicitors. Why would solicitors take the chance of compromising their own position by referring clients to SJP.
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Tony Cohen | 23 Feb 2011 4:38 pm
Interesting that SJP seem to be using the same arguments that the banks have been trying on for years - Oh wait a minute - their majority shareholder is a bank (Lloyds) owned by the taxpayer. Hmmmmm I wonder....
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Anonymous | 23 Feb 2011 4:39 pm
They would call on that though wouldn't they...
If Solicitors are going to refer clients for investment advice, they should be referring them to IFA's only as these are the only people who can give truly independent advice, if that gives them a small choice of advisers to refer business to, then so be it....
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john | 23 Feb 2011 4:51 pm
This is understandable but clearly nonsense. The trouble with this argument is that allowing restricted advice introductions might at one end be SJP and at another be a really really restricted solution. If SJP believe that the SRA can give a blanket sign-off they are in cloud cuckoo land
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Phil Billingham | 23 Feb 2011 5:12 pm
A couple of simple points.
Firstly, panels have nothing to do with being Restricted. They are an adminstrative device that is required at times as a result of the breadth of choice arising from being Independent.
Secondly, latest surveys show about 1 in 11 IFA's are considering Restricted. Not sure that is 'many'?
Thirdly, the reason that referrals to IFA only is a rule is that to refer to a restricted / tied Adviser is, in effect, to recommend that companies products, leaving merely the detail - usually how much to go into an Insurance Bond - to be organised by the salesman. That is why the unauthorised Advice given by many Solicitors and Accountants to invest with the Equitable direct sales operation was so flawed, and look how well clients did out of that arrangement!
I suspect most fellow professionals do not want to be drawn into giving Investment Advice of this nature, in breach of the FSMA, and remain happy to work with proper IFA's and Planners.
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Anonymous | 23 Feb 2011 5:19 pm
I went to have a look at the SJP set up by visiting one of their city centre sales offices, sorry my mistake admin centre.
The first thing that struck me was it was like being transported back to the eighties to a Liberty Life sales office, complete with shiny suites and talk of what to buy this month with their £20K commission cheque (sorry salary)
I bet SJP don't let their solicitor referrers anywhere near their inner sanctum.
It would be interesting to gauge opiion if they were allowed to see what really goes on.
And before the SJP regional managers start trying to defend these comments please don't has you are the ones that drive this culture to ensure you get your part of the pie with your over inflated overide commissions.
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SJP and direct sales | 23 Feb 2011 5:53 pm
Well before we all lash out over "restricted advice" remember we have a regulators that does not give a kipper for independence. As a result RDR will force many IFA's into a restricted advice model because it will be unsafe to operate otherwise.
SJP smoke and mirrors already run circles around the FSA and clients think they are dealing with IFAs in any case. They use so called Distributor Influenced funds where SJP takes responsibility for all sales undertaken by their "partners".
After bringing in former IFA's with the promise of attractive buyouts - thereafter former clients future business and top ups are handled by a SJP IFA who never actually see the client.
Instead the now tied agent conducts the advice but do not place the sale. Good luck to them but it makes you wonder what all this regulation is about but perhaps its a bit too clever for the FSA to figure out and certainly too clever for a solicitor to figure out but in the meantime we real IFAs continue to jump through hoops to prove the independence of our advice.
Maybe this is because SJP is an evolution of Allied Dunbar model and nothing wrong with that I might add but I do note the former directors are all millionaires and part of the establishment. They made their money out of front end loading and now are Lord this and Sir! Perhaps they have had a word with Hector back at the club!
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