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Solicitor struck off after referring clients to tied adviser

A solicitor has been struck off for failing to refer clients to an independent financial adviser, among other failings highlighted by the Solicitors Regulation Authority.

The Solicitors Regulation Authority brought a case to the Solicitors Disciplinary Tribunal against Andrew Field, of Kent solicitors Field & Co, based on three alleged breaches of the Solicitors Code of Conduct 2007.

It alleged that Field failed to refer his clients to IFAs for investment advice, allowed his independence to be compromised and misled Medway county court in failing to disclose certain loans from the tied adviser to which he referred his clients, as part of an individual voluntary loan arrangement.

The SRA’s code of conduct states solicitors can only refer clients who need investment advice to independent intermediaries who can advise on investment products from across the whole of the market and offer a fee option.

The SRA started investigating Field & Co in October 2009. The firm ceased trading in October 2010. The SRA’s investigation report highlighted three clients Field had referred to a tied adviser.

The Solicitors Disciplinary Tribunal states the adviser was a partner/appointed representative of a wealth management service. Both the adviser and the firm are not named in the judgment.

The first client had suffered brain damage as a result of a road accident. Field was appointed to deal with the client’s affairs. On the advice given by the tied adviser, Field invested £1.45m out of a total £1.6m in the adviser firm’s unit trust and international investment bond products.

In the second case, Field was acting as joint trustee and executor of an estate that had set aside £300,000 for investment. The adviser recommended the full £300,000 be invested in the firm’s investment bond. In the third case, Field was acting as power of attorney for a woman aged 101. The adviser again recommended the client’s total £300,000 fund should be invested in the firm’s investment bond.

The judgment says, based on Field’s figures, initial commissions would have been more than £43,500 in the case of the first client and £9,000 each for the second and third. Even if the funds made no gains, the annual commission on all three cases would total more than £10,000.

Field received a £25,000 loan from the adviser to which he was referring but no evidence was provided to show he disclosed this to clients. Field failed to disclose the loan as part of an IVA which was agreed in January 2010.

The tribunal found all three allegations were proved beyond reasonable doubt.

Aurora Financial Planning chartered financial planner Aj Somal says: “It is vital that solicitors are aware of their duty to act in the best interests of their clients and refer to IFAs. This is particularly important after the RDR when advisers may describe themselves as restricted whole of market but are not truly independent.”

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Comments

There are 37 comments at the moment, we would love to hear your opinion too.

  1. It would be interesting to know which company this adviser was tied to. Anyone?

  2. Why has the Adviser and his Firm not been named and shamed in this. They know the rules as well, but in my experience they are happy to lie about their status to gain business

  3. We're all doomed!! 24th May 2012 at 10:34 am

    He won’t be doing that again!!!!

  4. This is excellent news. Well done to the SRA.

  5. Yes, David exactly. Why has the adviser not been named and shamed?

  6. Fair old chance they’ll come out at some point.

    I could hazard a guess but ….. well let’s ust wait and see 🙂

    At last the Law Society bares its teeth and actually does something to support its own rules.

    Love it – more of these please

    Ian Coley
    Partner
    Medical Investment Services

  7. “states the adviser was a partner/appointed representative of a wealth management service. Both the adviser and the firm are not named in the judgment.”

    Now I wonder which “upmarket” wealth management firm this could possibly be!!!

  8. When are they going to do something about SJP??

  9. Could the firm have a name ending in Place by any chance?

  10. About time!!! and I bet the firm was name after a place in London

  11. On a technicality, has the adviser done anything wrong? The rules that govern who Solicitors can refer business to govern Solicitors, not Financial Advisers.

  12. @ Lawyers R Us.

    Does that make it right?

  13. So
    Justice
    Prevails

  14. No John – just playing devil’s advocate!

  15. Julian Stevens 24th May 2012 at 11:09 am

    Shouldn’t the tied adviser be aware of the rules on solicitor referrals and have declined the referral?

  16. Of course he/she should Julian – I don’t think there can be any doubt of this – and if he/she did not, you have to be concerned about what else he/she didn/t know!!!!

  17. @ All tied up

    Very ingenious – I wonder how long until your post is removed!

    I think Lawyers R Us is making a fair point, however, the “Partner” involved should have been aware of the restrictions that apply and, consequently, is breach of the FSA’s Rules for Business.

    I trust that the FSA will be considering the reputational damage caused and will be investigating this serious matter without delay, and will publish accordingly.

    In the interests of fairness, and to avoid maligning a certain “upmarket” sales operation, perhaps MM could ask the company in question to confirm or deny whether one of their “partners” is involved?

  18. I always find it illuminating to the read the “Related Articles” section of the webpage.

    Is there something we should be told? 🙂

  19. Lawyers R us point) – On a technicality, has the adviser done anything wrong? The rules that govern who Solicitors can refer business to govern Solicitors, not Financial Advisers.

    Julians point) – Shouldn’t the tied adviser be aware of the rules on solicitor referrals and have declined the referral?

    Technically….probably not I guess, although I can’t help feeling that under TCF, Julians point carries weight. Could be argued that a solicitor is a professional and therefore the same standard of care isn’t required, but I can’t help feeling that’s relying on the “small print” argument.

  20. David Trenner - Intelligent Pensions 24th May 2012 at 11:47 am

    Was this guy struck off for referring to a tied agent? I think not. I think that he was struck off for failing to be open and honest in his IVA, by not disclosing the loan from the Wealth Manager.

    My guess is that the referral to the tied agent was just an additional charge “taken into consideration”.

  21. man on the moon 24th May 2012 at 11:51 am

    101 year olds should buy CIBS!!

    gets right around CRAG regs or does it?????

    ps now I do wonder how that one or any others slip through

  22. Wouldn’t you have thought, what with a solicitors qualifications and the study time he must have endured that only correct advice could ever have been given? Higher qualifications do only lead to correct advice don’t they?

  23. One other relevant point in the article which I believe should be investigated further is the involvement of the “loan” from the adviser to the solicitor.

    How common is this practice? Either from the adviser concerned or the organisation that he represents. If just a one off then perhaps it was just incidental. If not then this could get messy!

    MM. Investigate further please.

  24. Hurrah,finally some justice in the world.Spread the word as fast as possible ,maybe solicitors will finally get the message ,its taken long enough!

  25. Exasperated Me 24th May 2012 at 1:06 pm

    So the best way to get referrals from a solicitor is to offer a ‘loan’?

  26. Tyrone Murphy 24th May 2012 at 2:03 pm

    I think the issues here are that the solicitor did not disclose the loan of £25,000 from the adviser in his IVA. In addition the solicitor did not reveal the relationship with the adviser to the clients concerned. They believed him to be impartial when in fact he had a financial relationship with the adviser. If the solicitor had been referring to an IFA under the exact circumstances he would have still been struck off for the other failings.

  27. When I worked at a certain ‘saintly’ wealth manager which professed to be upmarket, partners were given hadouts to explain to solicitors and accountants how their rules could be by-passed. Principles-based regulation anybody?

  28. Devil’s advocate Lawyers R Us?

    Not Saints’ advocate then?

  29. S hould the
    P ublic really
    J ust be deceived

  30. Should
    The
    Jury
    Avoid
    Many
    Elaborate
    Specific

    Suggestions

  31. Nothing to do with this case – the SRA could do nothing about a solicitor who behaved unethically – in my view – in a client matter with which I had some dealings because it was out of time. If an IFA had behaved as the solicitor had done they would have been crucified. So let’s not cheer too loudly for the SRA just yet!!!!

  32. Bet we can all hazard a good guess at which wealth managment business this might be.

  33. Epitaph of the eminent barrister Sir John Strange:

    Here lies an honest lawyer,–
    that is Strange.

    From Epitaphiana: or, The Curiosities of Churchyard Literature, 1873.

  34. It just goes to show that however high the qualification is, greed will often be the determing factor in the issue at stake.

    The FSA never did cotton on to that, forcing a huge raft of people to go through qualifications that are not key to their world of advice.

    If I am not forced out of business in the next few years, I will be very interested to see the complaints statisticsand how they compare, pre RDR and post RDR

  35. Julian Stevens 28th May 2012 at 10:11 am

    Unless the tied adviser was ignorant of the rules on solicitor referrals, which is hard to believe in view of the publicity the subject has received over the past few years, then the simple act of accepting such a referral would surely constitute complicity with the solicitor breaking his own regulatory authority’s rules?

    Somewhere or other in the FSA’s 10,000 page book of rules, there must be something that declares such an act to constitute a breach, thus warranting some sort of sanction?

  36. Clive Barwell 28th May 2012 at 5:09 pm

    Of course the financial adviser has done something wrong; HSBC just got fined £10.5m for flogging investment bonds to elderly people! Putting £300K into one for a 101-year old has to be mis-selling, surely?

    There’s also the question of whether the Adviser mislead the Solicitor in terms of what their true status was. A representative of that well-known, upmarket wealth adviser once answered my question regarding independence with the deflected answer of – we are for mortgages. Others are encouraged to set-up an IFA businesses for life assurance, etc, which just becomes introducers to the tied business for investments. Not exactly cricket, is it?!

  37. @Clive – Re “set-up an IFA businesses for life assurance, etc, which just becomes introducers to the tied business for investments”
    If you look at your “Keyfacts about our services and costs”, you will notice that even if you are an Investment IFA, the protection section cannot describe you as “Independant” as there is no such thing as an Independant protection adviser in the FSA rulebook. I think that is similar with mortgages, i.e. you are one of two different types of “whole of market”, either “representative sample” (often commission/proc fee only) or true whole of market, including non proc/commission paying mortgages too (which is what we are)
    I wonder what action the professional body will take with this “adviser”, they could decline to issue an SPS, the FSA might not even need to get involved as a result to stop this person trading!
    This was one of the issued I was debating with David Ross of the CII over “SPS”, i.e. someone’s trade can be restricted by the Professional Body, without a court’s involvement.
    @ David Ross – My SPS arrived this morning and it only took 6 days I think from when I applied, so doing the ROs to make sure Gap fill isn’t needed seems a very good way to get some peace of mind of being ready to trade post Dec 2012.

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