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SRA recommends solicitors make financial advisers decision

The Solicitors Regulation Authority (SRA) will recommend that its Board decides to allow solicitors to refer clients to any financial adviser, regardless of whether or not they are tied to particular institution.

Board members will be asked to make a decision on the best way to deal with changing Financial Services Authority regulations on advisers when they meet on 28 November. And officers have recommended that amending the Code of Conduct's Outcome (6.3) allowing solicitors to put clients "in a position to make informed decisions about referrals in respect of investment advice".

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 looked at the options for amending the duties expressed as outcomes in chapter 6. The SRA also needed to ensure that best outcomes for clients are achieved and there is a risk that only allowing solicitors to refer to those advisers deemed "independent" might be contrary to that aim.

The SRA launched a consultation on independent financial advisers in July . It closed on September 10 and the authority has been analysing responses since then, and will advise Board to move to the preferred option, option 3, as listed in the consultation document.

Agnieszka Scott, SRA Director of Policy, said: "We had an excellent response to our consultation and we'd like to thank all those who responded. We've taken on board the comments received, some of which have given us food for thought.

"However, nothing has changed us from our belief that the best way forward is to implement our preferred option, option 3, and that's what we'll be recommending to the Board. This represents the best fit with outcomes-focused regulation as solicitors, as highly qualified professionals, would be free to assess and discuss clients' needs, not be restricted by a prescriptive rule."

In the consultation document, the SRA outlined the benefits of option 3 as:

  • Supporting outcomes-focused regulation as it does not prescribe how the outcome must be achieved
  • Reflecting the possibility that under the new FSA regime, many firms currently described as independent financial advisers or independent intermediaries may not be able to label their advice as independent because they will not, for example, advise on a sufficiently broad product range meaning, the lawyer would be unable to recommend them to their client
  • Making the lawyer ensure the client understands the implications of a particular recommendation
  • Ensuring the client is involved in the decision-making process
  • Removing restrictions of customer choice, if seeking financial advice referral through a solicitor

The Board papers can be accessed below:

Go to the Board papers

The consultation is can be accessed here:

Go to the consultation document

 
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