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SRA amends Handbook for Financial Advisers
22 January 2013

The Solicitors Regulation Authority (SRA) has amended its Handbook to allow solicitors to refer clients needing financial advice to any financial adviser.

Version 6 of the Handbook went live on 1 January and includes the change to the Code of Conduct that allows solicitors to refer to the financial adviser that offers the best outcome for the client. Previously, solicitors have only been allowed to refer to financial advisers deemed “independent” by the Financial Services Authority (FSA).

The SRA has changed the Code to ensure that best outcomes for clients are achieved as there is a risk that only allowing solicitors to refer to those advisers deemed “independent” might be contrary to that aim. The FSA’s definition of independent is also to change soon as part of its Retail Distribution Review.

Agnieszka Scott, SRA Director of Strategy and Policy, said: “The amendment has been brought in to remove any barriers solicitors may face when trying to achieve the best outcome for their client. Doing away with the prescriptive rule about what kind of financial adviser should be referred to achieves this aim.

“It needs to be reiterated that we are not making a judgement on who provides the best financial advice?independent advisers or otherwise?which is what a lot of people who responded to the consultation did. We have simply removed an administrative blockage, allowing the solicitor to make a considered judgement on what’s best for their client.”

The consultation exercise took place over the late summer and the majority of respondents argued for their respective positions. There were comments too from the Financial Services Consumer Panel, which represents the public in the development of financial services.

The Panel said: “We support consumer choice and think it entirely right that the client should be provided with sufficient information to make a decision on the type of advice service that would meet his/her needs, rather than automatically being referred to an independent financial adviser. This is particularly important given the potential cost of independent financial advice and the availability of possibly more appropriate and cost-effective advice services, such as restricted advice.”

Other amendments to the Handbook for Version?6 included the removal of the section 69 sunset clause for the Compensation Fund, which means that any claims for compensation made against law firms set up as alternative business structures will be dealt with by the existing fund rather than creating a new fund.

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