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Professional introductions under threat in new regime

IFAs face losing some of their most lucrative clients from professional introducers if they multi-tie under FSA plans.

Accountants and solicitors would be prohibited from referring clients to all levels of adviser except IFAs charging fees because their professional rulebooks require them to “act independently” in referring clients.

The move could see some IFAs lose up to a third of their business while those deciding to remain independent could see business from these sources rise as rivals multi-tie.

Many IFAs will have to create new structures such as joint ventures and dual-channelled firms to protect introducer relationships built up over years.

Institute of Chartered Accountants for England and Wales head of regulatory policy Peter Burton says: “Accountants are meant to refer work for providing independent financial advice. The FSA is saying they are allowing independents to exist if they have fee arrangements. Accountants will have to refer to them.”

Roger Sanders associates principal Roger Sanders says: “Firms that rely on professional introducers will have to decide whether to switch to fees or give up that income and move to commission. But the market is fluid now, there will be opportunities for joint ventures and restructuring.”

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