SRA mulls consultation on financial adviser rules
4 July 2012
The SRA Board has been asked to approve a consultation on the rules governing how solicitors work with financial advisers.
Financial Services Authority (FSA) regulations on advisers are due to change at the end of the year. Solicitors often refer clients to these advisers to provide financial services, and provisions in the SRA Code of Conduct lay out the rules for these instances.
With the FSA Code changing, the SRA Code needs to change too, and the consultation will look at amending the duties expressed as outcomes in Chapter 6. Specifically, the SRA needs to look at the phrases "independent intermediary" and "packaged products" as they are no longer in line with changes brought about by the FSA's Retail Distribution Review, nor the SRA's move to outcomes-focused regulation.
Agnieszka Scott, SRA Financial Regulation Policy Manager, said: "Our Code of Conduct has been commented upon in relation to financial advisers on two fronts. The first is that the Code effectively prescribes how the outcomes that need to come about should be achieved, as it appears to pre-empt the solicitor's judgement.
"Secondly, the language is out-of-date, as the FSA's Retail Distribution Review has clarified the distinction between independent and restricted advisers and made it easier for clients to make a choice on the products available. For that reason, we're consulting on three options available to us, and we'd like as many people as possible to provide their views to us."
The options are:
- 1. Keep Outcome (6.3) but alter the language to remove reference to "independent intermediary" and replace it with wording to reflect the terminology contained in the FSA's Retail Distribution Review
- 2. Remove Outcome (6.3) from the SRA Code of Conduct
- 3. Replace Outcome (6.3) with wording which requires clients to be in a position to make informed decisions about referrals in respect of investment advice
Option 3 is the SRA's preferred option.
The Board meets today (Wednesday 4 July) and will look at the proposed consultation and decide whether or not to ask stakeholders for their opinions on the key issues. If it agrees to the consultation, views will be sought across July and August.
Also being discussed is the fourth consultation on the Quality Assurance Scheme for Advocates (QASA) and the second annual Equality & Diversity report.