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Solicitors’ clients need more than investment advice

Recent clarification from the Solicitors Regulation Authority that solicitors should only refer clients to IFAs for investment advice is very welcome.

The SRA, which is the regulatory arm of the Law Society, says the clarification was needed as it had become aware of multi-tied and tied advisers approaching law firms touting for business.

The SRA says firms must always act in the best interests of the client and “this means they must refer clients to IFAs for investment advice”.

One name in particular springs to mind when you hear the SRA outline its reasons for the clarification – St James’s Place. For the last few years, the representative body for solicitor IFAs, Sifa, has been vocal in its concern that SJP may have been persuading solicitors to refer business to its multi-tied agents.

Sifa has lobbied tirelessly for this issue to be addressed by the SRA and it has to be hoped that the new rules offer an increased opportunity for IFAs to expand their legal business connections.

On the back of the clarification, SJP has updated its guidance to partners accordingly, highlighting the fact that clients needing investment advice can only be forwarded to IFAs. But this guidance goes on to say SJP partners can still pitch for referrals for advice on inheritance tax planning, trusts, long-term care, mortgages and protection.

Surely if the SRA is of the view that accessing independent advice is in the best interest of the client for investment business, it should be of the same opinion for IHT planning, protection and mortgages? This should especially be the case when considering the complex advice that is often required around IHT and trusts.

Worries about continued consumer confusion around certain types of advice should be high on the agenda of those putting the finishing touches to the final retail distribution review document.

The RDR is set to create a strict barrier between independent, whole-of-market advice and the restricted advice of firms operating multi-tied and tied models. There is nothing wrong with operating different advice models as long as the consumer is clear on the type of advice they are receiving.

Problems occur when certain firms try to blur this distinction through clever marketing and sales techniques.

FSA staff promise to be extra vigilant in policing firms that attempt to blur this line. Let’s hope that they stick to their word.


Senn replaces Schiro as Zurich chief exec

Zurich Financial Services has appointed Martin Senn as its new chief executive. Senn, who is currently the firm’s chief investment officer, will replace James Schiro when he retires in December.


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