Your client and introductions to third parties

Version 18 of the Handbook was published on 1 November 2016. For more information, please click "History" above.

Chapter 6: Your client and introductions to third parties

There may be circumstances in which you wish to refer your clients to third parties, perhaps to another lawyer or a financial services provider. This chapter describes the conduct duties which arise in respect of such introductions. It is important that you retain your independence when recommending third parties to your client and that you act in the client's best interests.

The outcomes in this chapter show how the Principles apply in the context of your client and introductions to third parties.

Outcomes

You must achieve these outcomes:

O(6.1)

whenever you recommend that a client uses a particular person or business, your recommendation is in the best interests of the client and does not compromise your independence;

O(6.2)

clients are fully informed of any financial or other interest which you have in referring the client to another person or business;

O(6.3)

clients are in a position to make informed decisions about how to pursue their matter;

O(6.4)

you are not paid a prohibited referral fee.

Indicative behaviours

Acting in the following way(s) may tend to show that you have achieved these outcomes and therefore complied with the Principles:

IB(6.1)

any arrangement you enter into in respect of regulated mortgage contracts, regulated credit agreements, general insurance contracts (including after the event insurance) or pure protection contracts, provides that referrals will only be made where this is in the best interests of the particular client and the contract or agreement is suitable for the needs of that client;

IB(6.2)

any referral to a third party that can only offer products from one source is made only after the client has been informed of this limitation;

IB(6.3)

having effective systems in place for assessing whether any arrangement complies with the statutory and regulatory requirements;

IB(6.4)

retaining records and management information to enable you to demonstrate that any payments you receive are not prohibited referral fees.

Acting in the following way(s) may tend to show that you have not achieved these outcomes and therefore not complied with the Principles:

IB(6.5)

entering into any arrangement which restricts your freedom to recommend any particular business, except in respect of regulated mortgage contracts, general insurance contracts or pure protection contracts;

IB(6.6)

being an appointed representative.

In-house practice

The outcomes in this chapter apply to your in-house practice.

Notes

(i)

See Outcome 1.15, in relation to financial benefits that you may receive in respect of introductions to third parties.

(ii)

If the introduction is in connection with the provision of financial services, and your firm is not authorised by the Financial Conduct Authority, you will need to comply with the SRA Financial Services (Scope) Rules 2001 and the SRA Financial Services (Conduct of Business) Rules 2001. Where an introduction is not a regulated activity because you can rely on an exclusion in the Regulated Activities Order, you will need nevertheless to consider Outcome 1.15.

(iii)

This chapter should be read in conjunction with Chapter 12 (Separate businesses).